Drive Shack Inc (NYSE:DS), a hospitality company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Drive Shack’s outlook and valuation to see if the opportunity still exists. See our latest analysis for Drive Shack
What is Drive Shack worth?
Great news for investors – Drive Shack is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $62.31, but it is currently trading at $5.61 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Drive Shack’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Drive Shack?
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. With profit expected to grow by 92.68% over the next couple of years, the future seems bright for Drive Shack. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since Drive Shack is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on Drive Shack for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy Drive Shack. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.