Pennsylvania Real Estate Investment Trust (NYSE:PEI), which is in the reits business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$5.96 at one point, and dropping to the lows of US$3.39. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Pennsylvania Real Estate Investment Trust's current trading price of US$3.60 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 Pennsylvania Real Estate Investment Trust’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Pennsylvania Real Estate Investment Trust still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.0% below my intrinsic value, which means if you buy Pennsylvania Real Estate Investment Trust today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $3.79, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Pennsylvania Real Estate Investment Trust’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Pennsylvania Real Estate Investment Trust 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 the company's future expectations. Pennsylvania Real Estate Investment Trust’s earnings over the next few years are expected to increase by 51%, 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? It seems like the market has already priced in PEI’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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on PEI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining 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 Pennsylvania Real Estate Investment Trust. You can find everything you need to know about Pennsylvania Real Estate Investment Trust in the latest infographic research report. If you are no longer interested in Pennsylvania Real Estate Investment Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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