Mantra Group Ltd hits new 52-week low – Are the shares a steal?

Credit: Vern

On Tuesday, shares in accommodation and hotel operator Mantra Group Ltd (ASX: MTR) sunk as low as $3.04 during the trading session, marking a new 52-week low, before closing down 7.7% at $3.14.

Based on yesterday’s closing price the stock has now fallen a total of 38% in calendar year 2016 and is trading at levels last seen in early 2015.

So could Mantra’s shares now be in value territory or could more falls lie ahead?

According to analyst consensus data provided by Reuters, the consensus estimate from 10 analysts is for the group to earn 16.6 cents per share (cps) in financial year (FY) 2016 and 19.3 cps in FY 2017.

At $3.14 this implies a price-to-earnings ratio of around 19 times and 16 times respectively.

Based on the FY 2017 forecast the pricing of Mantra could be starting to look appealing and further falls may be limited.

Here are three reasons to be bullish on the group’s prospects.

  1. Mantra owns high quality assets and is Australia’s leading accommodation provider with over $7 billion in assets under management
  2. The group operates under three well-known brands – Peppers, Mantra and BreakFree
  3. The group achieves gross operating profits of over 50%

There are numerous ways to gain exposure to the tourism theme which appears to be one of the few bright spots within the domestic economy. While some investors have been buying shares in companies like Qantas Airways Limited (ASX: QAN) and leisure and theme park operator Ardent Leisure Group (ASX: AAD) for exposure to this thematic, at current prices Mantra could be a more appealing opportunity to investigate.

3 Rotten Shares to Sell, and 1 to Buy Today

After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You'll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an "emergency low." Simply click here to uncover these stocks.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.