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When Should You Buy Quanex Building Products Corporation (NYSE:NX)?

Simply Wall St
·3 min read

While Quanex Building Products Corporation (NYSE:NX) might not be the most widely known stock at the moment, it led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Quanex Building Products’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Quanex Building Products

What's the opportunity in Quanex Building Products?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12.11% above my intrinsic value, which means if you buy Quanex Building Products today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $17.70, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Quanex Building Products’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 Quanex Building Products?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. Though in the case of Quanex Building Products, it is expected to deliver a relatively unexciting top-line growth of 9.0% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? NX’s future growth appears to have been factored into the current share price, 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on NX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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 want to dive deeper into Quanex Building Products, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Quanex Building Products you should be mindful of and 1 of these is a bit unpleasant.

If you are no longer interested in Quanex Building Products, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.