Is It Time To Consider Buying Vector Group Ltd. (NYSE:VGR)?

Vector Group Ltd. (NYSE:VGR), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Vector Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Vector Group

What Is Vector Group Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.96% above my intrinsic value, which means if you buy Vector Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $10.77, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Vector Group’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 does the future of Vector Group look like?

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. In Vector Group's case, its revenues over the next few years are expected to grow by 80%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in VGR’s positive outlook, 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 the stock? 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 VGR, 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 the company, 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.

If you want to dive deeper into Vector Group, you'd also look into what risks it is currently facing. When we did our research, we found 4 warning signs for Vector Group (2 are significant!) that we believe deserve your full attention.

If you are no longer interested in Vector Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.