What Is Gildan Activewear Inc’s (TSE:GIL) Share Price Doing?
Gildan Activewear Inc (TSX:GIL), a luxury company based in Canada, received a lot of attention from a substantial price movement on the TSX in the over the last few months, increasing to CA$41.37 at one point, and dropping to the lows of CA$37.03. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Gildan Activewear’s current trading price of CA$40.6 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 Gildan Activewear’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 Gildan Activewear
What is Gildan Activewear worth?
According to my valuation model, Gildan Activewear seems to be fairly priced at around 12% below my intrinsic value, which means if you buy Gildan Activewear today, you’d be paying a reasonable price for it. And if you believe the company’s true value is CA$46.09, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Gildan Activewear’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of Gildan Activewear look like?
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. With profit expected to grow by a double-digit 16.55% over the next couple of years, the outlook is positive for Gildan Activewear. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in Gildan Activewear’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on Gildan Activewear, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Gildan Activewear. You can find everything you need to know about Gildan Activewear in the latest infographic research report. If you are no longer interested in Gildan Activewear, 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.
