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Is It Too Late To Consider Buying Badger Daylighting Ltd. (TSE:BAD)?

Simply Wall St

Badger Daylighting Ltd. (TSE:BAD), which is in the construction business, and is based in Canada, received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$40.00 at one point, and dropping to the lows of CA$31.30. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Badger Daylighting's current trading price of CA$33.97 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 Badger Daylighting’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 Badger Daylighting

Is Badger Daylighting still cheap?

The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Badger Daylighting’s ratio of 18.46x is trading in-line with its industry peers’ ratio, which means if you buy Badger Daylighting today, you’d be paying a relatively reasonable price for it. Is there another opportunity to buy low in the future? Since Badger Daylighting’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.

What does the future of Badger Daylighting look like?

TSX:BAD Past and Future Earnings, January 12th 2020

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. 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. With profit expected to grow by 28% over the next couple of years, the future seems bright for Badger Daylighting. 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? BAD’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 track record of its management team. Have these factors changed since the last time you looked at BAD? Will you have enough conviction to buy should the price fluctuate below the true value?

Are you a potential investor? If you’ve been keeping tabs on BAD, 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 BAD, 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 Badger Daylighting. You can find everything you need to know about Badger Daylighting in the latest infographic research report. If you are no longer interested in Badger Daylighting, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.