Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Husqvarna AB (publ) (STO:HUSQ B), which is in the consumer durables business, and is based in Sweden, saw a double-digit share price rise of over 10% in the past couple of months on the OM. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Husqvarna’s outlook and valuation to see if the opportunity still exists.
What's the opportunity in Husqvarna?
According to my valuation model, Husqvarna seems to be fairly priced at around 15% below my intrinsic value, which means if you buy Husqvarna today, you’d be paying a fair price for it. And if you believe the company’s true value is SEK102.27, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Husqvarna’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Husqvarna?
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 more than double over the next couple of years, the future seems bright for Husqvarna. 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 HUSQ B’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 confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on HUSQ B, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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 Husqvarna. You can find everything you need to know about Husqvarna in the latest infographic research report. If you are no longer interested in Husqvarna, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.