Yahoo Finance Is Regis Healthcare Limited (ASX:REG) Potentially Undervalued?
Regis Healthcare Limited (ASX:REG), which is in the healthcare business, and is based in Australia, received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to A$3.68 at one point, and dropping to the lows of A$2.97. 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 Regis Healthcare’s current trading price of A$2.97 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 Regis Healthcare’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 Regis Healthcare
What’s the opportunity in Regis Healthcare?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 16.57x is currently trading slightly below its industry peers’ ratio of 19.57x, which means if you buy Regis Healthcare today, you’d be paying a reasonable price for it. And if you believe Regis Healthcare should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. In addition to this, it seems like Regis Healthcare’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Regis Healthcare generate?
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. Regis Healthcare’s earnings over the next few years are expected to increase by 21.1%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in REG’s positive outlook, 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 REG? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping an eye on REG, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for REG, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Regis Healthcare. You can find everything you need to know about Regis Healthcare in the latest infographic research report. If you are no longer interested in Regis Healthcare, 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 editorial-team@simplywallst.com.
