Yirendai Ltd (NYSE:YRD), a consumer finance company based in China, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $43.64 at one point, and dropping to the lows of $34.87. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Yirendai’s current trading price of $35.27 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Yirendai’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Yirendai
What’s the opportunity in Yirendai?Great news for investors – Yirendai is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $92.74, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Yirendai’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Yirendai generate?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 79.23% over the next couple of years, the future seems bright for Yirendai. 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? Since YRD is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on YRD for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy YRD. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Yirendai. You can find everything you need to know about Yirendai in the latest infographic research report. If you are no longer interested in Yirendai, you can use our free platform to see my list of over 50 other stocks with a high growth potential.