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While Norcros plc (LON:NXR) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the 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 take a look at Norcros’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Norcros
What's The Opportunity In Norcros?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 5.34% above our intrinsic value, which means if you buy Norcros today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth £2.33, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Norcros’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.
Can we expect growth from Norcros?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a negative profit growth of -3.5% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Norcros. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? NXR seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on NXR for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on NXR should the price fluctuate below its true value.