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Hanger, Inc. (NYSE:HNGR), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$19.49 and falling to the lows of US$14.57. 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 Hanger's current trading price of US$15.88 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 Hanger’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Hanger worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.7% below my intrinsic value, which means if you buy Hanger today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $17.02, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Hanger’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.
Can we expect growth from Hanger?
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. Though in the case of Hanger, it is expected to deliver a relatively unexciting earnings growth of 6.6%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Hanger, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in HNGR’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 financial strength of the company. 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?
Are you a potential investor? If you’ve been keeping tabs on HNGR, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Hanger at this point in time. When we did our research, we found 3 warning signs for Hanger (1 is significant!) that we believe deserve your full attention.
If you are no longer interested in Hanger, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.