Stock Analysis
Marcus & Millichap, Inc. (NYSE:MMI), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$38.35 at one point, and dropping to the lows of US$30.99. 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$30.99 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.
Check out 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. 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 11.66x is currently trading slightly below its industry peers’ ratio of 12.45x, which means if you buy Marcus & Millichap today, you’d be paying a reasonable price for it. And if you believe that Marcus & Millichap should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Is there another opportunity to buy low in the future? Since Marcus & Millichap’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.
Can we expect growth from Marcus & Millichap?
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. 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 an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Marcus & Millichap, at least in the near future.
What This Means For You
Are you a shareholder? Currently, MMI appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on MMI, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on MMI for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on MMI should the price fluctuate below the industry PE ratio.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Marcus & Millichap.
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.
What are the risks and opportunities for Marcus & Millichap?
Marcus & Millichap, Inc., an investment brokerage company, provides real estate investment brokerage and financing services to sellers and buyers of commercial real estate in the United States and Canada.
Rewards
Price-To-Earnings ratio (12.1x) is below the US market (15.1x)
Risks
High level of non-cash earnings
Significant insider selling over the past 3 months
Further research on
Marcus & Millichap
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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.
About NYSE:MMI
Marcus & Millichap
Marcus & Millichap, Inc., an investment brokerage company, provides real estate investment brokerage and financing services to sellers and buyers of commercial real estate in the United States and Canada.
Flawless balance sheet and slightly overvalued.
