Caesarstone Ltd. (NASDAQ:CSTE), which is in the building business, and is based in Israel, saw significant share price movement during recent months on the NasdaqGS, rising to highs of $20.85 and falling to the lows of $12.74. 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 Caesarstone’s current trading price of $13.25 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 Caesarstone’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Caesarstone still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.12% above my intrinsic value, which means if you buy Caesarstone today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $12.6, 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 Caesarstone’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 Caesarstone?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Caesarstone’s earnings over the next few years are expected to increase by 61%, 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? CSTE’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 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 CSTE, 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 Caesarstone. You can find everything you need to know about Caesarstone in the latest infographic research report. If you are no longer interested in Caesarstone, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.