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CoreCivic, Inc. (NYSE:CXW), which is in the reits business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of $24.07 and falling to the lows of $19.64. 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 CoreCivic’s current trading price of $19.64 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CoreCivic’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is CoreCivic worth?
Great news for investors – CoreCivic is still trading at a fairly cheap price. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that CoreCivic’s ratio of 13.65x is below its peer average of 33.19x, which suggests the stock is undervalued compared to the REITs industry. Although, there may be another chance to buy again in the future. This is because CoreCivic’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.
What kind of growth will CoreCivic generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 3.2% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for CoreCivic.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since CXW is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on CXW for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CXW. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CoreCivic. You can find everything you need to know about CoreCivic in the latest infographic research report. If you are no longer interested in CoreCivic, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.