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Why BWX Limited (ASX:BWX) Could Be Worth Watching

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·3 min read
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BWX Limited (ASX:BWX), which is in the personal products business, and is based in Australia, received a lot of attention from a substantial price increase on the ASX over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on BWX’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for BWX

What's the opportunity in BWX?

According to my valuation model, BWX seems to be fairly priced at around 8.02% above my intrinsic value, which means if you buy BWX today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is A$3.46, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since BWX’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.

What does the future of BWX look like?

ASX:BWX Past and Future Earnings May 21st 2020
ASX:BWX Past and Future Earnings May 21st 2020

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. BWX’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 BWX’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on BWX, 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 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 BWX. You can find everything you need to know about BWX in the latest infographic research report. If you are no longer interested in BWX, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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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. 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. Thank you for reading.