Should You Buy Pier 1 Imports Inc (NYSE:PIR) At $3.06?
Pier 1 Imports Inc (NYSE:PIR), a specialty retail company based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $4.34 and falling to the lows of $2.98. 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 Pier 1 Imports’s current trading price of $3.06 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 Pier 1 Imports’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Pier 1 Imports
Is Pier 1 Imports still cheap?
Great news for investors – Pier 1 Imports is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $5.11, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Pier 1 Imports’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Pier 1 Imports?
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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Pier 1 Imports, at least in the near future.
What this means for you:
Are you a shareholder? Although PIR 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 PIR, 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 tabs on PIR for some time, but hesitant on making the leap, I recommend you dig deeper 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 Pier 1 Imports. You can find everything you need to know about Pier 1 Imports in the latest infographic research report. If you are no longer interested in Pier 1 Imports, 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.
