Fang Holdings Limited (NYSE:SFUN), which is in the interactive media and services business, and is based in China, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $3.13 at one point, and dropping to the lows of $1.69. 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 Fang Holdings’s current trading price of $1.69 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 Fang Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Fang Holdings?
Fang Holdings appears to be overvalued by 24.98% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$1.69 on the market compared to my intrinsic value of $1.35. This means that the opportunity to buy Fang Holdings at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Fang Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
What does the future of Fang Holdings 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. 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 the company’s future expectations. Fang Holdings’s revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? SFUN’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SFUN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on SFUN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for SFUN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Fang Holdings. You can find everything you need to know about Fang Holdings in the latest infographic research report. If you are no longer interested in Fang Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.