OMNOVA Solutions Inc (NYSE:OMN), a chemicals company based in United States, saw a decent share price growth in the teens level on the NYSE over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on OMNOVA Solutions’s outlook and valuation to see if the opportunity still exists. View our latest analysis for OMNOVA Solutions
Is OMNOVA Solutions still cheap?
The stock is currently trading at US$10.90 on the share market, which means it is overvalued by 67% compared to my intrinsic value of $6.54. This means that the opportunity to buy OMNOVA Solutions at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since OMNOVA Solutions’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 OMNOVA Solutions generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted revenue growth of 6.80% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for OMNOVA Solutions, at least in the short term.
What this means for you:
Are you a shareholder? OMN’s future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe OMN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on OMN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors 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 OMNOVA Solutions. You can find everything you need to know about OMNOVA Solutions in the latest infographic research report. If you are no longer interested in OMNOVA Solutions, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.