MGP Ingredients, Inc. (NASDAQ:MGPI), which is in the beverage 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$52.78 at one point, and dropping to the lows of US$32.43. 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 MGP Ingredients's current trading price of US$32.43 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 MGP Ingredients’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 MGP Ingredients
What is MGP Ingredients worth?
Good news, investors! MGP Ingredients is still a bargain right now. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.77x is currently well-below the industry average of 34.03x, meaning that it is trading at a cheaper price relative to its peers. However, given that MGP Ingredients’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 MGP Ingredients look like?
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. 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 relatively muted profit growth of 8.1% expected over the next year, growth doesn’t seem like a key driver for a buy decision for MGP Ingredients, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since MGPI is currently undervalued, it may be a great time to increase your holdings in the stock. 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 MGPI for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MGPI. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MGP Ingredients. You can find everything you need to know about MGP Ingredients in the latest infographic research report. If you are no longer interested in MGP Ingredients, 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.
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February 25, 2020 at 08:05PM
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Is It Too Late To Consider Buying MGP Ingredients, Inc. (NASDAQ:MGPI)? - Yahoo Finance
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