Enova International Inc (NYSE:ENVA), a consumer finance company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Enova International’s outlook and value based on the most recent financial data to see if the opportunity still exists. View out our latest analysis for Enova International
Is Enova International still cheap?According to my relative valuation model, the stock is currently overvalued. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Enova International’s ratio of 27.36x is above its peer average of 14.71x, which suggests the stock is overvalued compared to the Consumer Finance industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Enova International’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Enova International generate?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. With profit expected to more than double over the next couple of years, the future seems bright for Enova International. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in ENVA’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ENVA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on ENVA for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for ENVA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Enova International. You can find everything you need to know about Enova International in the latest infographic research report. If you are no longer interested in Enova International, you can use our free platform to see my list of over 50 other stocks with a high growth potential.