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Pinnacle Entertainment Inc (NASDAQ:PNK), a hospitality company based in United States, received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $33.11 at one point, and dropping to the lows of $29.82. 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 Pinnacle Entertainment’s current trading price of $31.15 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 Pinnacle Entertainment’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Pinnacle Entertainment
What is Pinnacle Entertainment worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11% above my intrinsic value, which means if you buy Pinnacle Entertainment today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $27.96, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Pinnacle Entertainment’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Pinnacle Entertainment 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. Pinnacle Entertainment’s earnings over the next few years are expected to increase by 20.16%, 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 PNK’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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?