Is It Time To Buy BAE Systems plc (LON:BA.)?
Let’s talk about the popular BAE Systems plc (LSE:BA.). The company’s shares received a lot of attention from a substantial price movement on the LSE in the over the last few months, increasing to £5.94 at one point, and dropping to the lows of £5.36. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether BAE Systems’s current trading price of £5.68 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at BAE Systems’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for BAE Systems
Is BAE Systems still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.62% below my intrinsic value, which means if you buy BAE Systems today, you’d be paying a reasonable price for it. And if you believe the company’s true value is £6.81, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like BAE Systems’s share price is quite stable, which means 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 BAE Systems?
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. With profit expected to grow by a double-digit 15.29% over the next couple of years, the outlook is positive for BAE Systems. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in BA.’s positive 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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on BA., 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 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 BAE Systems. You can find everything you need to know about BAE Systems in the latest infographic research report. If you are no longer interested in BAE Systems, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
