Is It Too Late To Buy Citi Trends Inc (NASDAQ:CTRN)?
Citi Trends Inc (NASDAQ:CTRN), a specialty retail company based in United States, received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $32.12 at one point, and dropping to the lows of $27.63. 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 Citi Trends’s current trading price of $28.55 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 Citi Trends’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 Citi Trends
What is Citi Trends worth?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 23.16x is currently trading slightly above its industry peers’ ratio of 20.73x, which means if you buy Citi Trends today, you’d be paying a relatively fair price for it. And if you believe that Citi Trends should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Furthermore, it seems like Citi Trends’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 Citi Trends?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. In the upcoming year, Citi Trends’s earnings are expected to increase by 33.54%, 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? CTRN’s optimistic 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 financial strength of the company. Have these factors changed since the last time you looked at CTRN? 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 CTRN, 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 CTRN, 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 Citi Trends. You can find everything you need to know about Citi Trends in the latest infographic research report. If you are no longer interested in Citi Trends, 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.
