EMC Insurance Group Inc (NASDAQ:EMCI), a insurance company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $28.72 and falling to the lows of $26.1. 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 EMC Insurance Group’s current trading price of $26.74 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at EMC Insurance Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for EMC Insurance Group
What is EMC Insurance Group worth?According to my valuation model, the stock is currently overvalued by about 33%, trading at US$26.74 compared to my intrinsic value of $20.14. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that EMC Insurance Group’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from EMC Insurance Group?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. Though in the case of EMC Insurance Group, it is expected to deliver a negative earnings growth of -2.50%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? If you believe EMCI is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on EMCI for some time, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on EMC Insurance Group. You can find everything you need to know about EMC Insurance Group in the latest infographic research report. If you are no longer interested in EMC Insurance Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.