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While MTY Food Group Inc. (TSE:MTY) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$61.70 at one point, and dropping to the lows of CA$52.69. 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 MTY Food Group's current trading price of CA$57.27 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 MTY Food Group’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 MTY Food Group
What Is MTY Food Group Worth?
Great news for investors – MTY Food Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is CA$76.17, but it is currently trading at CA$57.27 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because MTY Food Group’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.
What does the future of MTY Food Group 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. 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. In MTY Food Group's case, its revenues over the next few years are expected to grow by 81%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since MTY is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.