Is It Time To Consider Buying Benchmark Electronics, Inc. (NYSE:BHE)?
Benchmark Electronics, Inc. (NYSE:BHE), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Benchmark Electronics’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Benchmark Electronics
Is Benchmark Electronics still cheap?
According to my valuation model, the stock is currently overvalued by about 23%, trading at US$25.38 compared to my intrinsic value of $20.67. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Benchmark Electronics’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Benchmark Electronics?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted revenue growth of 9.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Benchmark Electronics, at least in the short term.
What this means for you:
Are you a shareholder? BHE’s future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe BHE should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on BHE for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Benchmark Electronics as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 2 warning signs with Benchmark Electronics, and understanding these should be part of your investment process.
If you are no longer interested in Benchmark Electronics, 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 editorial-team@simplywallst.com.
