At CA$185, Is WSP Global Inc. (TSE:WSP) Worth Looking At Closely?
Let's talk about the popular WSP Global Inc. (TSE:WSP). The company's shares received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$196 at one point, and dropping to the lows of CA$175. 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 WSP Global's current trading price of CA$185 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at WSP Global’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 WSP Global
What's The Opportunity In WSP Global?
According to my valuation model, WSP Global seems to be fairly priced at around 9.6% below my intrinsic value, which means if you buy WSP Global today, you’d be paying a reasonable price for it. And if you believe the company’s true value is CA$204.82, then there’s not much of an upside to gain from mispricing. What's more, WSP Global’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will WSP Global generate?
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. WSP Global's earnings over the next few years are expected to increase by 68%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? WSP’s optimistic 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 track record of its management team. 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 WSP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which 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.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for WSP Global and you'll want to know about this.
If you are no longer interested in WSP Global, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
