Meridian Energy Limited (NZSE:MEL), a independent power and renewable electricity producers company based in New Zealand, maintained its current share price over the past couple of month on the NZSE, with a relatively tight range of NZ$2.8 to NZ$3.01. However, does this price actually reflect the true value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MEL’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 Meridian Energy

Is MEL still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12% below my intrinsic value, which means if you buy MEL today, you’d be paying a fair price for it. And if you believe MEL’s true value is NZ$3.22, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like MEL’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because MEL’s stock is less volatile than the wider market given its low beta.

What does the future of MEL look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. MEL’s earnings over the next few years are expected to increase by 30.62%, 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? MEL’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 MEL? 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 MEL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for MEL, 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 Meridian Energy. You can find everything you need to know about MEL in the latest infographic research report. If you are no longer interested in Meridian Energy, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.