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Brady Corporation (NYSE:BRC), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NYSE over the last few months. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Brady’s outlook and valuation to see if the opportunity still exists.
What is Brady worth?
According to my valuation model, Brady seems to be fairly priced at around 6.1% below my intrinsic value, which means if you buy Brady today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $58.54, then there’s not much of an upside to gain from mispricing. What's more, Brady’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Brady look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 52% over the next couple of years, the future seems bright for Brady. 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? It seems like the market has already priced in BRC’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 the stock? 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 BRC, now may not be the most advantageous 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.
If you'd like to know more about Brady as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Brady you should know about.
If you are no longer interested in Brady, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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