Summit Materials Inc (NYSE:SUM), a basic materials company based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $27.84 and falling to the lows of $19.04. 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 Summit Materials’s current trading price of $19.2 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Summit Materials’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Summit Materials still cheap?
Great news for investors – Summit Materials is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $37.78, but it is currently trading at US$19.20 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Summit Materials’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Summit Materials 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. 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 95.2% over the next couple of years, the future seems bright for Summit Materials. 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? Since SUM is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on SUM for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SUM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Summit Materials. You can find everything you need to know about Summit Materials in the latest infographic research report. If you are no longer interested in Summit Materials, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.