U.S. Markets closed

Is Designer Brands Inc. (NYSE:DBI) Potentially Undervalued?

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Designer Brands Inc. (NYSE:DBI), which is in the specialty retail 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 $23.24 at one point, and dropping to the lows of $17.76. 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 Designer Brands's current trading price of $19.14 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Designer Brands’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Designer Brands

What is Designer Brands worth?

Great news for investors – Designer Brands is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $31.54, but it is currently trading at US$19.14 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Designer Brands’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from Designer Brands?

NYSE:DBI Past and Future Earnings, July 9th 2019

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. However, with a relatively muted revenue growth of 9.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Designer Brands, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since DBI is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on DBI for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DBI. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Designer Brands. You can find everything you need to know about Designer Brands in the latest infographic research report. If you are no longer interested in Designer Brands, 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.