Yahoo Finance At US$015, Is It Time To Buy Textainer Group Holdings Limited (NYSE:TGH)?
Textainer Group Holdings Limited (NYSE:TGH), a trade distributors company based in Bermuda, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $19 and falling to the lows of $15. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Textainer Group Holdings’s current trading price of $15 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 Textainer Group Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Textainer Group Holdings
What’s the opportunity in Textainer Group Holdings?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 18.95x is currently trading slightly above its industry peers’ ratio of 14.42x, which means if you buy Textainer Group Holdings today, you’d be paying a relatively fair price for it. And if you believe that Textainer Group Holdings should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Textainer 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Textainer Group Holdings generate?
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. In the upcoming year, Textainer Group Holdings’s earnings are expected to increase by 82.82%, 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 TGH’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 TGH? 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 an eye on TGH, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for TGH, which means it’s worth diving deeper into 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 Textainer Group Holdings. You can find everything you need to know about Textainer Group Holdings in the latest infographic research report. If you are no longer interested in Textainer Group Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
