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Schweitzer-Mauduit International, Inc. (NYSE:SWM), which is in the forestry business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. Less-covered, small caps tend to present 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? Today I will analyse the most recent data on Schweitzer-Mauduit International’s outlook and valuation to see if the opportunity still exists.
What’s the opportunity in Schweitzer-Mauduit International?
According to my valuation model, Schweitzer-Mauduit International seems to be fairly priced at around 18.8% above my intrinsic value, which means if you buy Schweitzer-Mauduit International today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $26.73, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Schweitzer-Mauduit International’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Schweitzer-Mauduit International?
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 63% over the next couple of years, the future seems bright for Schweitzer-Mauduit International. It looks like higher cash flow 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 SWM’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 an eye on SWM, 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 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 Schweitzer-Mauduit International. You can find everything you need to know about Schweitzer-Mauduit International in the latest infographic research report. If you are no longer interested in Schweitzer-Mauduit International, 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.