Charles River Laboratories International, Inc. (NYSE:CRL), which is in the life sciences 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. 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? Let’s examine Charles River Laboratories International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Charles River Laboratories International still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.6% below my intrinsic value, which means if you buy Charles River Laboratories International today, you’d be paying a fair price for it. And if you believe the company’s true value is $162.11, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Charles River Laboratories 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 Charles River Laboratories 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. Charles River Laboratories International’s earnings over the next few years are expected to increase by 63%, 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? CRL’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 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 CRL, 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 Charles River Laboratories International. You can find everything you need to know about Charles River Laboratories International in the latest infographic research report. If you are no longer interested in Charles River Laboratories International, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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