- Oops!Something went wrong.Please try again later.
Simpson Manufacturing Co., Inc. (NYSE:SSD), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$102 and falling to the lows of US$87.38. 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 Simpson Manufacturing's current trading price of US$89.37 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 Simpson Manufacturing’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Simpson Manufacturing?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19.31% above my intrinsic value, which means if you buy Simpson Manufacturing today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $74.91, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Simpson Manufacturing’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.
Can we expect growth from Simpson Manufacturing?
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. However, with a relatively muted profit growth of 2.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Simpson Manufacturing, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SSD’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 SSD, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Simpson Manufacturing has 1 warning sign we think you should be aware of.
If you are no longer interested in Simpson Manufacturing, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.