What Is Resource Capital Corp’s (RSO) Share Price Doing?
Resource Capital Corp (NYSE:RSO), a diversified financials company based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $11.13 and falling to the lows of $9.45. 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 RSO's current trading price of $10.15 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 RSO’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 Resource Capital
What is RSO worth?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-book (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that RSO’s ratio of 0.4x is trading slightly below its industry peers’ ratio of 1.1x, which means if you buy RSO today, you’d be paying a relatively reasonable price for it. And if you believe RSO should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since RSO’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much RSO moves relative to the rest of the market.
What kind of growth will RSO generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at RSO future expectations. With profit expected to grow by 76.29% over the next year, the near-term future seems bright for RSO. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? RSO’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at RSO? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on RSO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for RSO, which means it’s worth further examining 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 Resource Capital. You can find everything you need to know about RSO in the latest infographic research report. If you are no longer interested in Resource Capital, 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.
