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Is Now The Time To Look At Buying John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS)?

Simply Wall St

John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), which is in the food business, and is based in United States, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$106 at one point, and dropping to the lows of US$87.62. 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 John B. Sanfilippo & Son's current trading price of US$90.32 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at John B. Sanfilippo & Son’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for John B. Sanfilippo & Son

What's the opportunity in John B. Sanfilippo & Son?

According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that John B. Sanfilippo & Son’s ratio of 22.57x is trading slightly below its industry peers’ ratio of 25.53x, which means if you buy John B. Sanfilippo & Son today, you’d be paying a reasonable price for it. And if you believe that John B. Sanfilippo & Son should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like John B. Sanfilippo & Son’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from John B. Sanfilippo & Son?

NasdaqGS:JBSS Past and Future Earnings, January 22nd 2020

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. Though in the case of John B. Sanfilippo & Son, it is expected to deliver a negative earnings growth of -8.7%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? JBSS 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 optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on JBSS, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on JBSS for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears 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 gel your views on JBSS 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 John B. Sanfilippo & Son. You can find everything you need to know about John B. Sanfilippo & Son in the latest infographic research report. If you are no longer interested in John B. Sanfilippo & Son, 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.