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Mirvac Group (ASX:MGR), a reits company based in Australia, saw significant share price volatility over the past couple of months on the ASX, rising to the highs of A$2.35 and falling to the lows of A$2.01. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Mirvac Group’s current trading price of A$2.15 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 Mirvac Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Mirvac Group
Is Mirvac Group still cheap?
Great news for investors – Mirvac Group is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is A$3.01, but it is currently trading at AU$2.15 on the share market, meaning that there is still an opportunity to buy now. Mirvac Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What does the future of Mirvac Group look like?
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 over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Mirvac Group, at least in the near future.
What this means for you:
Are you a shareholder? Although MGR is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to MGR, 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 MGR 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.