Molina Healthcare Inc (NYSE:MOH), a healthcare 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 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. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Molina Healthcare’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Molina Healthcare still cheap?Great news for investors – Molina Healthcare is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $254.12, but it is currently trading at US$106 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Molina Healthcare’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 does the future of Molina Healthcare 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. However, with an expected decline of -4.79% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Molina Healthcare. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although MOH 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 MOH, 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 MOH for some time, but hesitant on making the leap, I recommend you dig deeper 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 Molina Healthcare. You can find everything you need to know about Molina Healthcare in the latest infographic research report. If you are no longer interested in Molina Healthcare, you can use our free platform to see my list of over 50 other stocks with a high growth potential.