Is Now The Time To Look At Buying Magellan Aerospace Corporation (TSE:MAL)?

·3 min read

Magellan Aerospace Corporation (TSE:MAL), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$10.86 and falling to the lows of CA$9.34. 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 Magellan Aerospace's current trading price of CA$10.03 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 Magellan Aerospace’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 Magellan Aerospace

Is Magellan Aerospace still cheap?

Great news for investors – Magellan Aerospace is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is CA$13.73, but it is currently trading at CA$10.03 on the share market, meaning that there is still an opportunity to buy now. However, given that Magellan Aerospace’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 kind of growth will Magellan Aerospace generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. Magellan Aerospace's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since MAL is currently undervalued, it may be a great time to increase 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 MAL for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MAL. 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 buy.

If you'd like to know more about Magellan Aerospace as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Magellan Aerospace, and understanding this should be part of your investment process.

If you are no longer interested in Magellan Aerospace, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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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