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When Should You Buy Spectrum Brands Holdings, Inc. (NYSE:SPB)?

Simply Wall St

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Spectrum Brands Holdings, Inc. (NYSE:SPB), which is in the household products business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $65.75 at one point, and dropping to the lows of $52.67. 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 Spectrum Brands Holdings's current trading price of $53.96 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Spectrum Brands Holdings’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 Spectrum Brands Holdings

What is Spectrum Brands Holdings worth?

Great news for investors – Spectrum Brands Holdings is still trading at a fairly cheap price. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Spectrum Brands Holdings’s ratio of 19.4x is below its peer average of 25.12x, which suggests the stock is undervalued compared to the Household Products industry. However, given that Spectrum Brands Holdings’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.

Can we expect growth from Spectrum Brands Holdings?

NYSE:SPB Past and Future Earnings, June 26th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Spectrum Brands Holdings, at least in the near future.

What this means for you:

Are you a shareholder? Although SPB is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to SPB, 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 SPB for some time, 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 Spectrum Brands Holdings. You can find everything you need to know about Spectrum Brands Holdings in the latest infographic research report. If you are no longer interested in Spectrum Brands Holdings, 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.