National Bank of Canada (TSE:NA) had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of CA$61.45 to CA$65.63. However, is this the true valuation level of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at National Bank of Canada’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is National Bank of Canada worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12.4% below my intrinsic value, which means if you buy National Bank of Canada today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$74.39, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since National Bank of Canada’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will National Bank of Canada 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. 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. With profit expected to grow by a double-digit 11.1% over the next couple of years, the outlook is positive for National Bank of Canada. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in NA’s positive outlook, 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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on NA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 National Bank of Canada. You can find everything you need to know about National Bank of Canada in the latest infographic research report. If you are no longer interested in National Bank of Canada, 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 email@example.com.