Is NEPI Rockcastle N.V. (JSE:NRP) Potentially Undervalued?

NEPI Rockcastle N.V. (JSE:NRP), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the JSE over the last few months, increasing to R118 at one point, and dropping to the lows of R104. 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 NEPI Rockcastle's current trading price of R105 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 NEPI Rockcastle’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for NEPI Rockcastle

Is NEPI Rockcastle Still Cheap?

Great news for investors – NEPI Rockcastle is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is ZAR146.49, but it is currently trading at R105 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, NEPI Rockcastle’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from NEPI Rockcastle?

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 negative profit growth of -18% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for NEPI Rockcastle. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although NRP is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to NRP, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on NRP for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

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. To help with this, we've discovered 4 warning signs (2 make us uncomfortable!) that you ought to be aware of before buying any shares in NEPI Rockcastle.

If you are no longer interested in NEPI Rockcastle, 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.