Greenlight Capital Re Ltd (NASDAQ:GLRE), a insurance company based in Cayman Islands, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $23.05 and falling to the lows of $20. 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 GLRE's current trading price of $20.95 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 GLRE’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 Greenlight Capital Re

What's the opportunity in GLRE?

According to my relative valuation model, GLRE seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.9x is currently trading slightly below its industry peers’ ratio of 18.7x, which means if you buy GLRE today, you’d be paying a reasonable price for it. And if you believe GLRE should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, GLRE’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for GLRE to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will GLRE generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.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 GLRE future expectations. With profit expected to grow by 99.57% over the next couple of years, the future seems bright for GLRE. 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? It seems like the market has already priced in GLRE’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 track record of its management team. Have these factors changed since the last time you looked at GLRE? 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 an eye on GLRE, 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 GLRE, 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 Greenlight Capital Re. You can find everything you need to know about GLRE in the latest infographic research report. If you are no longer interested in Greenlight Capital Re, 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.