U.S. Physical Therapy, Inc. (NYSE:USPH), which is in the healthcare business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$137 at one point, and dropping to the lows of US$122. 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 U.S. Physical Therapy's current trading price of US$134 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 U.S. Physical Therapy’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 U.S. Physical Therapy?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17.10% above my intrinsic value, which means if you buy U.S. Physical Therapy today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $114.25, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that U.S. Physical Therapy’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of U.S. Physical Therapy 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. U.S. Physical Therapy’s earnings over the next few years are expected to increase by 91%, 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? USPH’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on USPH, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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 U.S. Physical Therapy. You can find everything you need to know about U.S. Physical Therapy in the latest infographic research report. If you are no longer interested in U.S. Physical Therapy, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.