Precinct Properties New Zealand Limited (NZSE:PCT), a equity real estate investment trusts (reits) company based in New Zealand, saw its share price hover around a small range of NZ$1.26 to NZ$1.33 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at PCT’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 PCT
What is PCT worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 18% above my intrinsic value, which means if you buy PCT today, you’d be paying a relatively fair price for it. And if you believe PCT’s true value is NZ$1.13, there’s only an insignificant downside when the price falls to its real value. Furthermore, it seems like PCT’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because PCT’s stock is less volatile than the wider market given its low beta.
What kind of growth will PCT generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 PCT future expectations. 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 PCT, at least in the near future.
What this means for you:
Are you a shareholder? Currently, PCT appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on PCT, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on PCT for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on PCT should the price fluctuate below its true value.