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Columbia Sportswear Company (NASDAQ:COLM), might not be a large cap stock, but it led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Columbia Sportswear’s outlook and valuation to see if the opportunity still exists.
What's the opportunity in Columbia Sportswear?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.14% above my intrinsic value, which means if you buy Columbia Sportswear today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $86.69, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Columbia Sportswear’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Columbia Sportswear?
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. 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. With profit expected to more than double over the next couple of years, the future seems bright for Columbia Sportswear. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? COLM’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 COLM, now may not be the most advantageous 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 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 Columbia Sportswear, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Columbia Sportswear you should know about.
If you are no longer interested in Columbia Sportswear, 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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