SemGroup Corporation (NYSE:SEMG), a energy company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine SEMG’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for SEMG

What is SEMG worth?

SEMG is currently overpriced based on my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that SEMG’s ratio of 266.8x is above its peer average of 32.1x, which suggests the stock is overvalued compared to the energy industry. But, is there another opportunity to buy low in the future? Since SEMG’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much SEMG moves relative to the rest of the market.

What kind of growth will SEMG generate?

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 SEMG future expectations. With profit expected to more than double over the next couple of years, the future seems bright for SEMG. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? SEMG’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SEMG 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 SEMG for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for SEMG, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.