At US$60.73, Is It Time To Put Johnson Outdoors Inc. (NASDAQ:JOUT) On Your Watch List?
Johnson Outdoors Inc. (NASDAQ:JOUT), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$71.49 and falling to the lows of US$58.93. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Johnson Outdoors' current trading price of US$60.73 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Johnson Outdoors’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Johnson Outdoors
What Is Johnson Outdoors Worth?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Johnson Outdoors’s ratio of 15.59x is trading slightly above its industry peers’ ratio of 11.39x, which means if you buy Johnson Outdoors today, you’d be paying a relatively reasonable price for it. And if you believe that Johnson Outdoors should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, it seems like Johnson Outdoors’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.
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. 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. In the upcoming year, Johnson Outdoors' earnings are expected to increase by 20%, 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? It seems like the market has already priced in JOUT’s positive outlook, with shares trading around industry price multiples. 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 JOUT? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping tabs on JOUT, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for JOUT, 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.
If you'd like to know more about Johnson Outdoors as a business, it's important to be aware of any risks it's facing. Our analysis shows 4 warning signs for Johnson Outdoors (1 is a bit unpleasant!) and we strongly recommend you look at them before investing.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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