What Is Ashtead Group plc’s (LSE:AHT) Share Price Doing?
Ashtead Group plc (LSE:AHT), a trading companies and distributors company based in United Kingdom, saw a decent share price growth in the teens level on the LSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine AHT’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Ashtead Group
Is AHT still cheap?
According to my valuation model, AHT seems to be fairly priced at around 4% below my intrinsic value, which means if you buy AHT today, you’d be paying a fair price for it. And if you believe that AHT is really worth £19.47, then there’s not much of an upside to gain from mispricing. Furthermore, AHT’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 AHT to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from AHT?
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. 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 25.03% over the next couple of years, the future seems bright for AHT. 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? It seems like the market has already priced in AHT’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 AHT? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on AHT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for AHT, which means it’s worth further examining 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 Ashtead Group. You can find everything you need to know about AHT in the latest infographic research report. If you are no longer interested in Ashtead Group, 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.
