What Does The Berkeley Group Holdings plc's (LON:BKG) Share Price Indicate?
The Berkeley Group Holdings plc (LON:BKG), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Berkeley Group Holdings’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Berkeley Group Holdings
What's The Opportunity In Berkeley Group Holdings?
Good news, investors! Berkeley Group Holdings is still a bargain right now. According to my valuation, the intrinsic value for the stock is £71.61, but it is currently trading at UK£43.00 on the share market, meaning that there is still an opportunity to buy now. However, given that Berkeley Group Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Berkeley Group Holdings look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -19% 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? Although BKG is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to BKG, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on BKG for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you'd like to know more about Berkeley Group Holdings as a business, it's important to be aware of any risks it's facing. For example - Berkeley Group Holdings has 1 warning sign we think you should be aware of.
If you are no longer interested in Berkeley Group Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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