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While Mercer International Inc. (NASDAQ:MERC) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$8.16 and falling to the lows of US$4.91. 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 Mercer International's current trading price of US$4.96 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mercer International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
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Is Mercer International Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 9.5% below our intrinsic value, which means if you buy Mercer International today, you’d be paying a fair price for it. And if you believe the company’s true value is $5.48, 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 Mercer International’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.
View our latest analysis for Mercer International
Can we expect growth from Mercer International?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 a relatively muted revenue growth of 7.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Mercer International, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in MERC’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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?