In This Article:
CBL Corporation Limited (NZSE:CBL), a insurance company based in New Zealand, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of NZ$2.99 to NZ$3.22. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CBL’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 CBL
What’s the opportunity in CBL?
The stock is currently trading at NZ$3.17 on the share market, which means it is overvalued by 53% compared to my intrinsic value of NZ$2.08. Not the best news for investors looking to buy! Another thing to keep in mind is that CBL’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from CBL?
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. CBL’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in CBL’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe CBL should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CBL for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for CBL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.