Macquarie Infrastructure Corporation (NYSE:MIC), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a US$2.8b market cap stock, it seems odd Macquarie Infrastructure is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Macquarie Infrastructure’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Macquarie Infrastructure

Is Macquarie Infrastructure still cheap?

According to my valuation model, Macquarie Infrastructure seems to be fairly priced at around 12.38% above my intrinsic value, which means if you buy Macquarie Infrastructure today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $28.77, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Macquarie Infrastructure’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Macquarie Infrastructure generate?

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. In Macquarie Infrastructure's case, its revenues over the next few years are expected to grow by 33%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? MIC’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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?