When Should You Buy Newmark Group, Inc. (NASDAQ:NMRK)?

By
Simply Wall St
Published
December 27, 2021
NasdaqGS:NMRK
Source: Shutterstock

While Newmark Group, Inc. (NASDAQ:NMRK) might not be the most widely known stock at the moment, it led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Newmark Group’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Newmark Group

What is Newmark Group worth?

Great news for investors – Newmark Group is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.58x is currently well-below the industry average of 17.29x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Newmark Group’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 kind of growth will Newmark Group generate?

earnings-and-revenue-growth
NasdaqGS:NMRK Earnings and Revenue Growth December 27th 2021

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 Newmark Group, it is expected to deliver a highly negative earnings growth in the next few years, 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? Although NMRK is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to NMRK, 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 an eye on NMRK for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Newmark Group has 4 warning signs (and 2 which can't be ignored) we think you should know about.

If you are no longer interested in Newmark 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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