At US $ 43.17, is Marcus & Millichap, Inc. (NYSE: MMI) worth a close look?
Marcus & Millichap, Inc. (NYSE: MMI), isn’t the biggest company out there, but it has seen a significant increase in its share price of over 20% in the past two months on the NYSE. Less covered, small caps tend to present more opportunities for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still trade at a low price relative to its true value? Let’s take a look at the outlook and value of Marcus & Millichap based on the most recent financial data to see if the opportunity still exists.
See our latest review for Marcus & Millichap
What are Marcus & Millichap worth?
According to my multiple pricing model, which compares the company’s price / earnings ratio to the industry average, the stock price seems justified. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find that the Marcus & Millichap ratio of 22.41x is trading slightly below its industry peers ratio of 26.47x, which means if you buy Marcus & Millichap today you would be paying a price reasonable for that. And if you think Marcus & Millichap should trade at this level in the long run, then there isn’t much to gain over other peers in the industry. In addition, Marcus & Millichap’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This can mean that the stock is less likely to fall due to natural market volatility, suggesting fewer buying opportunities in the future.
What does the future of Marcus & Millichap look like?
Investors looking to grow their portfolio may want to consider the prospects of a company before buying its shares. While value investors argue that intrinsic value versus price matters most, a more compelling investment thesis would be high growth potential at a cheap price. Marcus & Millichap’s profit growth is expected to be in the teens over the coming year, indicating a solid future ahead. This should lead to strong cash flow, fueling a higher share value.
What this means for you:
Are you a shareholder? It appears the market has already taken in the positive outlook for MMI, with stocks trading around industry price multiples. However, there are also other important factors that we did not consider today, such as the financial strength of the company. Have these factors changed since the last time you looked at MMI? Will you be confident enough to invest in the business if the price drops below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on MMI, this might not be the best time to buy, given that it trades around industry price multiples. However, optimistic forecasts are encouraging for MMI, which means that it is worth taking a closer look at other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to learn more about Marcus & Millichap as a business, it is important to be aware of the risks it faces. At Simply Wall St, we found 1 warning sign for Marcus & Millichap and we think they deserve your attention.
If you are no longer interested in Marcus & Millichap, you can use our free platform to view our list of over 50 other stocks with high growth potential.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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