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Should You Investigate The Weir Group PLC (LON:WEIR) At UK£18.53?

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·3 min read
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While The Weir Group PLC (LON:WEIR) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the LSE, rising to highs of UK£20.46 and falling to the lows of UK£17.44. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Weir Group's current trading price of UK£18.53 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 Weir Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Weir Group

Is Weir Group still cheap?

The stock is currently trading at UK£18.53 on the share market, which means it is overvalued by 40% compared to my intrinsic value of £13.25. This means that the opportunity to buy Weir Group at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Weir Group’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 Weir Group?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Weir Group's earnings over the next few years are expected to increase by 58%, 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 well and truly priced in WEIR’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe WEIR 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 WEIR 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 optimistic prospect is encouraging for WEIR, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Weir Group, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Weir Group and we think they deserve your attention.

If you are no longer interested in Weir Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.