What Is Insteel Industries, Inc.'s (NYSE:IIIN) Share Price Doing?
Insteel Industries, Inc. (NYSE:IIIN), is not the largest company out there, but it saw a decent share price growth of 11% on the NYSE over the last few months. The recent share price gains has brought the company back closer to its yearly peak. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Insteel Industries’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Insteel Industries
What Is Insteel Industries Worth?
According to our valuation model, Insteel Industries seems to be fairly priced at around 0.2% below our intrinsic value, which means if you buy Insteel Industries today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $37.41, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Insteel Industries’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Insteel Industries 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. In the upcoming year, Insteel Industries' earnings are expected to increase by 72%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in IIIN’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on IIIN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.
So while earnings quality is important, it's equally important to consider the risks facing Insteel Industries at this point in time. Every company has risks, and we've spotted 1 warning sign for Insteel Industries you should know about.
If you are no longer interested in Insteel Industries, 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.
