Is Welbilt, Inc. (NYSE:WBT) Potentially Undervalued?
Welbilt, Inc. (NYSE:WBT), which is in the machinery business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of $17.27 and falling to the lows of $15.27. 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 Welbilt's current trading price of $15.55 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 Welbilt’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Welbilt
What's the opportunity in Welbilt?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.58% above my intrinsic value, which means if you buy Welbilt today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $13.69, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Welbilt’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.
Can we expect growth from Welbilt?
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. Welbilt’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 WBT’s positive outlook, 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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on WBT, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Welbilt. You can find everything you need to know about Welbilt in the latest infographic research report. If you are no longer interested in Welbilt, 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 editorial-team@simplywallst.com. 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.
