Should You Think About Buying Marten Transport, Ltd. (NASDAQ:MRTN) Now?

While Marten Transport, Ltd. (NASDAQ:MRTN) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$23.11 at one point, and dropping to the lows of US$19.50. 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 Marten Transport's current trading price of US$19.50 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 Marten Transport’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 Marten Transport

What Is Marten Transport Worth?

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 16.59x is currently trading slightly above its industry peers’ ratio of 14.3x, which means if you buy Marten Transport today, you’d be paying a relatively reasonable price for it. And if you believe Marten Transport should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Furthermore, Marten Transport’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will Marten Transport generate?

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 negative profit growth of -0.07% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Marten Transport. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? MRTN seems priced close to industry peers right now, 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 MRTN, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on MRTN 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 MRTN should the price fluctuate below the industry PE ratio.

It can be quite valuable to consider what analysts expect for Marten Transport from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Marten Transport, 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.