Stock Analysis

Is Now An Opportune Moment To Examine Lincoln Educational Services Corporation (NASDAQ:LINC)?

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NasdaqGS:LINC
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While Lincoln Educational Services Corporation (NASDAQ:LINC) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the NASDAQGS over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Lincoln Educational Services’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Lincoln Educational Services

What is Lincoln Educational Services worth?

According to my valuation model, Lincoln Educational Services seems to be fairly priced at around 2.3% below my intrinsic value, which means if you buy Lincoln Educational Services today, you’d be paying a fair price for it. And if you believe the company’s true value is $6.65, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Lincoln Educational Services’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Lincoln Educational Services?

earnings-and-revenue-growth
NasdaqGS:LINC Earnings and Revenue Growth March 17th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -19% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Lincoln Educational Services. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? LINC seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on LINC for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on LINC should the price fluctuate below its true value.

If you'd like to know more about Lincoln Educational Services as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Lincoln Educational Services (of which 2 make us uncomfortable!) you should know about.

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