Forward Air Corporation (NASDAQ:FWRD), which is in the logistics business, and is based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $71.79 and falling to the lows of $58.27. 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 Forward Air’s current trading price of $62.51 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 Forward Air’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 Forward Air?
According to my valuation model, Forward Air seems to be fairly priced at around 7.3% below my intrinsic value, which means if you buy Forward Air today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $67.43, then there isn’t much 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 Forward Air’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.
What does the future of Forward Air 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. However, with a relatively muted profit growth of 7.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Forward Air, at least in the short term.
What this means for you:
Are you a shareholder? FWRD’s future growth appears to have been factored into the current share price, 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 FWRD, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Forward Air. You can find everything you need to know about Forward Air in the latest infographic research report. If you are no longer interested in Forward Air, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.