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NEPI Rockcastle N.V. (JSE:NRP), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the JSE. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine NEPI Rockcastle’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for NEPI Rockcastle
What's The Opportunity In NEPI Rockcastle?
Good news, investors! NEPI Rockcastle is still a bargain right now. According to my valuation, the intrinsic value for the stock is ZAR146.57, but it is currently trading at R110 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that NEPI Rockcastle’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will NEPI Rockcastle 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. 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. Though in the case of NEPI Rockcastle, it is expected to deliver a negative earnings growth of -18%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Although NRP is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher 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.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 4 warning signs for NEPI Rockcastle you should be mindful of and 2 of these are concerning.