In This Article:
Howden Joinery Group Plc (LON:HWDN), might not be a large cap stock, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£8.67 and falling to the lows of UK£7.18. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Howden Joinery Group's current trading price of UK£7.18 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Howden Joinery Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Howden Joinery Group Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 19% below our intrinsic value, which means if you buy Howden Joinery Group today, you’d be paying a fair price for it. And if you believe the company’s true value is £8.85, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Howden Joinery Group’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.
View our latest analysis for Howden Joinery Group
Can we expect growth from Howden Joinery Group?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by 20% over the next couple of years, the future seems bright for Howden Joinery Group. 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 HWDN’s positive outlook, 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?