What Does Sylvamo Corporation's (NYSE:SLVM) Share Price Indicate?
Sylvamo Corporation (NYSE:SLVM), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. As a US$2.6b market-cap stock, it seems odd Sylvamo is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on Sylvamo’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Sylvamo
What Is Sylvamo Worth?
According to our valuation model, Sylvamo seems to be fairly priced at around 16% below our intrinsic value, which means if you buy Sylvamo today, you’d be paying a fair price for it. And if you believe that the stock is really worth $74.92, then there’s not much of an upside to gain from mispricing. What's more, Sylvamo’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Sylvamo?
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 Sylvamo, it is expected to deliver a negative earnings growth of -17%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? SLVM seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on SLVM for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on SLVM should the price fluctuate below its true value.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To that end, you should learn about the 4 warning signs we've spotted with Sylvamo (including 1 which is concerning).
If you are no longer interested in Sylvamo, 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.
