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While Johnson Outdoors Inc. (NASDAQ:JOUT) might not be the most widely known stock at the moment, it led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. 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? Let’s take a look at Johnson Outdoors’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Johnson Outdoors still cheap?
According to my valuation model, Johnson Outdoors seems to be fairly priced at around 15.83% above my intrinsic value, which means if you buy Johnson Outdoors today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $122.30, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Johnson Outdoors has a low beta, which suggests its share price is less volatile than the wider market.
What does the future of Johnson Outdoors 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. With profit expected to grow by a double-digit 10% in the upcoming year, the short-term outlook is positive for Johnson Outdoors. 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? JOUT’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 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 JOUT, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. While conducting our analysis, we found that Johnson Outdoors has 1 warning sign and it would be unwise to ignore it.
If you are no longer interested in Johnson Outdoors, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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