In This Article:
AMP Limited (ASX:AMP), which is in the diversified financial business, and is based in Australia, saw significant share price movement during recent months on the ASX, rising to highs of A$2.31 and falling to the lows of A$1.75. 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 AMP's current trading price of A$1.84 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 AMP’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 AMP
Is AMP still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.5% below my intrinsic value, which means if you buy AMP today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth A$1.98, then there’s not much of an upside to gain from mispricing. In addition to this, AMP has a low beta, which suggests its share price is less volatile than the wider market.
What does the future of AMP 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. AMP’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? AMP’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on AMP, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.