Have Investors Already Priced In Schnitzer Steel Industries Inc’s (NASDAQ:SCHN) Growth?
Schnitzer Steel Industries Inc (NASDAQ:SCHN), a metals and mining company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NasdaqGS. 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 Schnitzer Steel Industries’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Schnitzer Steel Industries
Is Schnitzer Steel Industries still cheap?
The stock is currently trading at $35.45 on the share market, which means it is overpriced by 39% compared to my intrinsic value of $25.48. This means that the opportunity to buy Schnitzer Steel Industries at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Schnitzer Steel Industries’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.
Can we expect growth from Schnitzer Steel Industries?
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 67.44% over the next couple of years, the future seems bright for Schnitzer Steel Industries. 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 well and truly priced in Schnitzer Steel Industries’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe Schnitzer Steel Industries 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 Schnitzer Steel Industries 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 Schnitzer Steel Industries, which 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 Schnitzer Steel Industries. You can find everything you need to know about Schnitzer Steel Industries in the latest infographic research report. If you are no longer interested in Schnitzer Steel Industries, 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.
