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Sensata Technologies Holding plc (NYSE:ST), might not be a large cap stock, but it saw a decent share price growth of 11% on the NYSE over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Sensata Technologies Holding’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What's The Opportunity In Sensata Technologies Holding?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 22.78x is currently trading slightly above its industry peers’ ratio of 21.49x, which means if you buy Sensata Technologies Holding today, you’d be paying a relatively reasonable price for it. And if you believe that Sensata Technologies Holding should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since Sensata Technologies Holding’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 the stock moves relative to the rest of the market.
See our latest analysis for Sensata Technologies Holding
Can we expect growth from Sensata Technologies Holding?
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 the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Sensata Technologies Holding. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in ST’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ST? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?