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Is Now An Opportune Moment To Examine Houghton Mifflin Harcourt Company (NASDAQ:HMHC)?

Simply Wall St

Houghton Mifflin Harcourt Company (NASDAQ:HMHC), which is in the consumer services business, and is based in United States, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$6.54 at one point, and dropping to the lows of US$5.48. 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 Houghton Mifflin Harcourt's current trading price of US$5.52 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 Houghton Mifflin Harcourt’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Houghton Mifflin Harcourt

What's the opportunity in Houghton Mifflin Harcourt?

Great news for investors – Houghton Mifflin Harcourt is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $8.99, but it is currently trading at US$5.52 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Houghton Mifflin Harcourt’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Houghton Mifflin Harcourt generate?

NasdaqGS:HMHC Past and Future Earnings, February 3rd 2020

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. Houghton Mifflin Harcourt’s earnings over the next few years are expected to increase by 27%, 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? Since HMHC is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on HMHC for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy HMHC. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Houghton Mifflin Harcourt. You can find everything you need to know about Houghton Mifflin Harcourt in the latest infographic research report. If you are no longer interested in Houghton Mifflin Harcourt, 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 editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.