Is Now An Opportune Moment To Examine Johnson Outdoors Inc. (NASDAQ:JOUT)?
Johnson Outdoors Inc. (NASDAQ:JOUT), which is in the leisure business, and is based in United States, received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. Less-covered, small caps tend to present 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 Johnson Outdoors’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Johnson Outdoors
What's the opportunity in Johnson Outdoors?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12% below my intrinsic value, which means if you buy Johnson Outdoors today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $87.13, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Johnson Outdoors’s low beta implies that the stock is less volatile than the wider market.
What kind of growth will Johnson Outdoors generate?
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. However, with a negative profit growth of -2.5% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Johnson Outdoors. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? JOUT seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on JOUT for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on JOUT should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Johnson Outdoors. You can find everything you need to know about Johnson Outdoors in the latest infographic research report. If you are no longer interested in Johnson Outdoors, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
