Is Cleanaway Waste Management Limited (ASX:CWY) Potentially Undervalued?
Cleanaway Waste Management Limited (ASX:CWY), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$2.79 at one point, and dropping to the lows of AU$2.34. 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 Cleanaway Waste Management's current trading price of AU$2.46 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 Cleanaway Waste Management’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 Cleanaway Waste Management
What Is Cleanaway Waste Management Worth?
According to my valuation model, Cleanaway Waste Management seems to be fairly priced at around 8.7% below my intrinsic value, which means if you buy Cleanaway Waste Management today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$2.70, then there’s not much of an upside to gain from mispricing. What's more, Cleanaway Waste Management’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Cleanaway Waste Management look like?
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. With profit expected to more than double over the next couple of years, the future seems bright for Cleanaway Waste Management. 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? CWY’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 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 CWY, 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 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. Case in point: We've spotted 2 warning signs for Cleanaway Waste Management you should be aware of.
If you are no longer interested in Cleanaway Waste Management, 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.
