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Renishaw plc (LON:RSW), 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£43.38 and falling to the lows of UK£34.44. 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 Renishaw's current trading price of UK£35.48 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 Renishaw’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Renishaw
What Is Renishaw Worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 10.55% above my intrinsic value, which means if you buy Renishaw today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £32.09, there’s only an insignificant downside when the price falls to its real value. In addition to this, Renishaw has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Renishaw generate?
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. Though in the case of Renishaw, it is expected to deliver a relatively unexciting earnings growth of 8.6%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in RSW’s future 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?
Are you a potential investor? If you’ve been keeping tabs on RSW, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.