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DFS Furniture plc (LON:DFS), might not be a large cap stock, but it saw a decent share price growth of 16% on the LSE over the last few months. The recent share price gains has brought the company back closer to its yearly peak. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at DFS Furniture’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for DFS Furniture
What's The Opportunity In DFS Furniture?
The stock is currently trading at UK£1.25 on the share market, which means it is overvalued by 33% compared to our intrinsic value of £0.94. This means that the opportunity to buy DFS Furniture at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since DFS Furniture’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
What does the future of DFS Furniture look like?
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. With profit expected to grow by 50% over the next couple of years, the future seems bright for DFS Furniture. 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? DFS’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe DFS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on DFS for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for DFS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.