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When Should You Buy Kadant Inc. (NYSE:KAI)?

Simply Wall St

Kadant Inc. (NYSE:KAI), which is in the machinery business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of $93.46 and falling to the lows of $80.89. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Kadant's current trading price of $81.97 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Kadant’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Kadant

What's the opportunity in Kadant?

Good news, investors! Kadant is still a bargain right now. According to my valuation, the intrinsic value for the stock is $115.28, but it is currently trading at US$81.97 on the share market, meaning that there is still an opportunity to buy now. However, given that Kadant’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Kadant look like?

NYSE:KAI Past and Future Earnings, August 23rd 2019

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. Though in the case of Kadant, it is expected to deliver a negative earnings growth of -3.9%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although KAI is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to KAI, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on KAI for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Kadant. You can find everything you need to know about Kadant in the latest infographic research report. If you are no longer interested in Kadant, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.