In This Article:
The Berkeley Group Holdings plc (LON:BKG), is not the largest company out there, but it saw a decent share price growth of 15% on the LSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. 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, what if the stock is still a bargain? Let’s examine Berkeley Group Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What's The Opportunity In Berkeley Group Holdings?
According to our valuation model, Berkeley Group Holdings seems to be fairly priced at around 6.4% below our intrinsic value, which means if you buy Berkeley Group Holdings today, you’d be paying a reasonable price for it. And if you believe the company’s true value is £42.54, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Berkeley Group Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Check out our latest analysis for Berkeley Group Holdings
What does the future of Berkeley Group Holdings look like?
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. However, with a negative profit growth of -13% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Berkeley Group Holdings. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? BKG seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 the stock, take a look at whether its fundamentals have changed.