Ladenburg Thalmann Financial Services Inc (NYSEMKT:LTS), a capital markets company based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the AMEX. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Ladenburg Thalmann Financial Services’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for Ladenburg Thalmann Financial Services
Is Ladenburg Thalmann Financial Services still cheap?The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-book (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that Ladenburg Thalmann Financial Services’s ratio of 1.8x is trading slightly below its industry peers’ ratio of 2.2x, which means if you buy Ladenburg Thalmann Financial Services today, you’d be paying a relatively fair price for it. And if you believe that Ladenburg Thalmann Financial Services should be trading at this level in the long run, 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 Ladenburg Thalmann Financial 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.
What kind of growth will Ladenburg Thalmann Financial Services generate?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. In the upcoming year, Ladenburg Thalmann Financial Services’s earnings are expected to increase by 38.16%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? LTS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at LTS? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on LTS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for LTS, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Ladenburg Thalmann Financial Services. You can find everything you need to know about Ladenburg Thalmann Financial Services in the latest infographic research report. If you are no longer interested in Ladenburg Thalmann Financial Services, you can use our free platform to see my list of over 50 other stocks with a high growth potential.