Is Now An Opportune Moment To Examine Littelfuse, Inc. (NASDAQ:LFUS)?
Littelfuse, Inc. (NASDAQ:LFUS), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Littelfuse’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Littelfuse
Is Littelfuse still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.13% above my intrinsic value, which means if you buy Littelfuse today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $258.05, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Littelfuse’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 Littelfuse 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. Littelfuse's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? LFUS’s optimistic future growth appears to have been factored into the current share price, 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 LFUS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to dive deeper into Littelfuse, you'd also look into what risks it is currently facing. For example - Littelfuse has 3 warning signs we think you should be aware of.
If you are no longer interested in Littelfuse, 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.
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