Yahoo Finance Is M.D.C. Holdings, Inc. (NYSE:MDC) Potentially Undervalued?
M.D.C. Holdings, Inc. (NYSE:MDC), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. 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 M.D.C. Holdings’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for M.D.C. Holdings
What's The Opportunity In M.D.C. Holdings?
M.D.C. Holdings appears to be overvalued by 36% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$39.12 on the market compared to my intrinsic value of $28.73. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since M.D.C. Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
Can we expect growth from M.D.C. Holdings?
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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for M.D.C. Holdings, at least in the near future.
What This Means For You
Are you a shareholder? If you believe MDC should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on MDC for some time, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?
If you want to dive deeper into M.D.C. Holdings, you'd also look into what risks it is currently facing. Be aware that M.D.C. Holdings is showing 3 warning signs in our investment analysis and 1 of those can't be ignored...
If you are no longer interested in M.D.C. Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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