Is It Too Late To Consider Buying Macquarie Infrastructure Corporation (NYSE:MIC)?

Macquarie Infrastructure Corporation (NYSE:MIC), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NYSE over the last few months. As a US$2.6b market cap stock, it seems odd Macquarie Infrastructure is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s take a look at Macquarie Infrastructure’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Macquarie Infrastructure

Is Macquarie Infrastructure still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.1% below my intrinsic value, which means if you buy Macquarie Infrastructure today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $30.92, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Macquarie Infrastructure’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 Macquarie Infrastructure 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 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 Macquarie Infrastructure, at least in the near future.

What this means for you:

Are you a shareholder? MIC seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on MIC for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which 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 MIC should the price fluctuate below its true value.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Be aware that Macquarie Infrastructure is showing 2 warning signs in our investment analysis and 1 of those doesn't sit too well with us...

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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. 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.
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