Is It Too Late To Consider Buying Mercer International Inc. (NASDAQ:MERC)?

Mercer International Inc. (NASDAQ:MERC), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$8.16 and falling to the lows of US$5.92. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Mercer International's current trading price of US$5.92 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 Mercer International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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Is Mercer International Still Cheap?

According to our valuation model, Mercer International seems to be fairly priced at around 7.99% above our intrinsic value, which means if you buy Mercer International today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $5.48, 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 Mercer International’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.

View our latest analysis for Mercer International

What does the future of Mercer International look like?

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 a relatively muted revenue growth of 7.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Mercer International, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in MERC’s future 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 tabs on MERC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of Mercer International.

If you are no longer interested in Mercer International, 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.