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Sypris Solutions Inc (NASDAQ:SYPR), a auto components company based in United States, saw a decent share price growth in the teens level on the NasdaqGM over the last few months. 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? Today I will analyse the most recent data on Sypris Solutions’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Sypris Solutions
Is Sypris Solutions still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 1.66x is currently trading slightly below its industry peers’ ratio of 1.84x, which means if you buy Sypris Solutions today, you’d be paying a relatively reasonable price for it. And if you believe that Sypris Solutions should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, Sypris Solutions’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.
Can we expect growth from Sypris Solutions?
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. However, with a relatively muted revenue growth of 7.37% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for Sypris Solutions.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SYPR’s growth 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 SYPR? 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 SYPR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive growth outlook may mean 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 Sypris Solutions. You can find everything you need to know about Sypris Solutions in the latest infographic research report. If you are no longer interested in Sypris Solutions, 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.