Is It Time To Buy Sonic Healthcare Limited (ASX:SHL)?
Sonic Healthcare Limited (ASX:SHL), a healthcare company based in Australia, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of A$21.29 to A$23.29. However, is this the true valuation level of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sonic Healthcare’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Sonic Healthcare
Is Sonic Healthcare still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1% below my intrinsic value, which means if you buy Sonic Healthcare today, you’d be paying a fair price for it. And if you believe the company’s true value is A$23.56, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like Sonic Healthcare’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.
What does the future of Sonic Healthcare 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. Sonic Healthcare’s earnings over the next few years are expected to increase by 28.21%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in Sonic Healthcare’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 Sonic Healthcare, 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 Sonic Healthcare. You can find everything you need to know about Sonic Healthcare in the latest infographic research report. If you are no longer interested in Sonic Healthcare, 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.
