Premier Inc (NASDAQ:PINC), a healthcare company based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Premier’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for Premier
What is Premier worth?Great news for investors – Premier is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $41.94, but it is currently trading at US$33.39 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Premier’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Premier?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. 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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Premier, at least in the near future.
What this means for you:
Are you a shareholder? Although PINC is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to PINC, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on PINC for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Premier. You can find everything you need to know about Premier in the latest infographic research report. If you are no longer interested in Premier, you can use our free platform to see my list of over 50 other stocks with a high growth potential.