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Schweitzer-Mauduit International, Inc. (NYSE:SWM), which is in the forestry business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. Less-covered, small caps sees 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 examine Schweitzer-Mauduit International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Schweitzer-Mauduit International worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy Schweitzer-Mauduit International today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $39.01, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Schweitzer-Mauduit 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 Schweitzer-Mauduit International?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted profit growth of 6.4% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Schweitzer-Mauduit International, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SWM’s future outlook, 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 an eye on SWM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 Schweitzer-Mauduit International. You can find everything you need to know about Schweitzer-Mauduit International in the latest infographic research report. If you are no longer interested in Schweitzer-Mauduit International, 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 firstname.lastname@example.org. 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.