Kiwi Property Group Limited (NZSE:KPG), a equity real estate investment trusts (reits) company based in New Zealand, saw its share price hover around a small range of $1.32 to $1.39 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at KPG’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 Kiwi Property Group
What's the opportunity in KPG?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5% above my intrinsic value, which means if you buy KPG today, you’d be paying a relatively reasonable price for it. And if you believe that KPG is really worth $1.28, there’s only an insignificant downside when the price falls to its real value. Furthermore, it seems like KPG’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 KPG’s stock is less volatile than the wider market given its low beta.
What does the future of KPG look like?
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 KPG future expectations. Though in the case of KPG, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? KPG seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on KPG, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on KPG for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on KPG should the price fluctuate below its true value.