Hill-Rom Holdings, Inc. (NYSE:HRC), which is in the medical equipment business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$116 at one point, and dropping to the lows of US$89.01. 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 Hill-Rom Holdings's current trading price of US$90.31 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 Hill-Rom Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Hill-Rom Holdings still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy Hill-Rom Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth $103.69, then there’s not much of an upside to gain from mispricing. Furthermore, Hill-Rom Holdings’s low beta implies that the stock is less volatile than the wider market.
What does the future of Hill-Rom Holdings look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Hill-Rom Holdings’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? HRC’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 an eye on HRC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Hill-Rom Holdings. You can find everything you need to know about Hill-Rom Holdings in the latest infographic research report. If you are no longer interested in Hill-Rom Holdings, 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 firstname.lastname@example.org. 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.
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