At $2.81, Is It Time To Buy Western Forest Products Inc (TSE:WEF)?
Western Forest Products Inc (TSX:WEF), a forestry company based in Canada, saw a double-digit share price rise of over 10% in the past couple of months on the TSX. 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 Western Forest Products’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for Western Forest Products
What is Western Forest Products worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7% above my intrinsic value, which means if you buy Western Forest Products today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth CA$2.63, there’s only an insignificant downside when the price falls to its real value. Furthermore, Western Forest Products’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Western Forest Products?
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 revenues expected to grow by a double-digit 23.91% over the next couple of years, the outlook is positive for Western Forest Products. If the level of expenses is able to be maintained, it looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? WEF’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 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 an eye on WEF, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Western Forest Products. You can find everything you need to know about Western Forest Products in the latest infographic research report. If you are no longer interested in Western Forest Products, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
