Should You Buy Masonite International Corporation (NYSE:DOOR) At US$68.30?
Masonite International Corporation (NYSE:DOOR), a building company based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $73.2 at one point, and dropping to the lows of $64.1. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Masonite International’s current trading price of $68.3 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 Masonite International’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 Masonite International
What’s the opportunity in Masonite International?
Masonite International appears to be overvalued by 28.64% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$68.30 on the market compared to my intrinsic value of $53.09. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Masonite International’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 Masonite International look like?
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. 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. However, with a relatively muted profit growth of 0.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Masonite International, at least in the short term.
What this means for you:
Are you a shareholder? DOOR’s 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 DOOR 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 tabs on DOOR for some time, 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 positive outlook 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 Masonite International. You can find everything you need to know about Masonite International in the latest infographic research report. If you are no longer interested in Masonite International, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
