What Does Marcus & Millichap, Inc.'s (NYSE:MMI) Share Price Indicate?

Marcus & Millichap, Inc. (NYSE:MMI), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$41.11 and falling to the lows of US$35.33. 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 Marcus & Millichap's current trading price of US$38.67 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 Marcus & Millichap’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 Marcus & Millichap

What's The Opportunity In Marcus & Millichap?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Marcus & Millichap’s ratio of 9.04x is trading slightly above its industry peers’ ratio of 8.56x, which means if you buy Marcus & Millichap today, you’d be paying a relatively sensible price for it. And if you believe that Marcus & Millichap should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, it seems like Marcus & Millichap’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Marcus & Millichap generate?

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 a relatively muted profit growth of 0.7% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Marcus & Millichap, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in MMI’s growth outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at MMI? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on MMI, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 1 warning sign for Marcus & Millichap you should be aware of.

If you are no longer interested in Marcus & Millichap, 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.