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What Does Clearwater Paper Corporation's (NYSE:CLW) Share Price Indicate?

Simply Wall St

Clearwater Paper Corporation (NYSE:CLW), which is in the forestry business, and is based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Clearwater Paper’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Clearwater Paper

Is Clearwater Paper still cheap?

Good news, investors! Clearwater Paper is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $38.12, but it is currently trading at US$19.12 on the share market, meaning that there is still an opportunity to buy now. However, given that Clearwater Paper’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 Clearwater Paper?

NYSE:CLW Past and Future Earnings, October 26th 2019

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. Though in the case of Clearwater Paper, it is expected to deliver a relatively unexciting top-line growth of 5.7% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

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

Are you a potential investor? If you’ve been keeping an eye on CLW for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CLW. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, 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 Clearwater Paper. You can find everything you need to know about Clearwater Paper in the latest infographic research report. If you are no longer interested in Clearwater Paper, 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.