BBA Aviation plc (LON:BBA), a infrastructure company based in United Kingdom, saw a decent share price growth in the teens level on the LSE over the last few months. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine BBA Aviation’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View out our latest analysis for BBA Aviation
Is BBA Aviation still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.52% above my intrinsic value, which means if you buy BBA Aviation today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth £3.24, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like BBA Aviation’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will BBA Aviation generate?
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. With profit expected to grow by 50.00% over the next couple of years, the future seems bright for BBA Aviation. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? BBA’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 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 tabs on BBA, 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 BBA Aviation. You can find everything you need to know about BBA Aviation in the latest infographic research report. If you are no longer interested in BBA Aviation, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.