Should You Buy Brambles Limited (ASX:BXB) At $9.9?
Let’s talk about the popular Brambles Limited (ASX:BXB). The company’s shares saw its share price hover around a small range of A$9.43 to A$10.35 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Brambles’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Brambles
Is Brambles still cheap?
Brambles appears to be overvalued by 36% at the moment, based on my discounted cash flow valuation. The stock is currently priced at A$9.9 on the market compared to my intrinsic value of A$7.29. This means that the opportunity to buy Brambles at a good price has disappeared! In addition to this, it seems like Brambles’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Brambles generate?
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 profit expected to grow by 69.24% over the next couple of years, the future seems bright for Brambles. 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? Brambles’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 Brambles 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 Brambles 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 optimistic prospect is encouraging for Brambles, which means it’s worth diving deeper into other factors 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 Brambles. You can find everything you need to know about Brambles in the latest infographic research report. If you are no longer interested in Brambles, 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.
