Royal Mail (RMG.L): Should You Invest Now?

Since August 2020, Royal Mail’s shares have struck past two years’ performance. The values went up by 70% resulting in 570-580 GBP so far. The company’s slope has been ranging from 563 GBP to 599 GBP for the last month. Moreover, the company was performing highly volatile. For example, on July 12, the share price increased 565 GBP to 577 GBP after a 10 GBP loss in the morning.

Over the last few months, Royal Mail plc’s share price has risen into the teens on the London Share Exchange. Besides, Royal Mail is still a good deal right now. The valuation model indicates that the share has an intrinsic value of £7.86, but it is currently trading at UK£5.78 in the share market, indicating that there is still time to buy. What’s more, Royal Mail’s share price is quite volatile, which gives us more opportunities to buy because the share price could fall (or rise) in the future. This is due to its high beta, which is a good indicator of how much the share moves in comparison to the rest of the market implying the company worth investment now.

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Investors seeking to diversify their portfolios may want to consider a company’s prospects before purchasing its shares. Although value investors would argue that the intrinsic value relative to the price is the most important factor, a more compelling investment thesis would be high growth potential at a low price. In the case of Royal Mail, however, earnings growth of 8.7 % is expected, which does not contribute to the company’s investment thesis. Growth does not appear to be a primary driver of the company’s purchase decision, at least in the short term.

Lora Nilsson

Finance and Business reporter After graduating high school. Lora decided to travel and blog as a part-timer. Today she enjoys what she loves and works remotely as our finance and business reporter

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