Columbia Sportswear Company (NASDAQ:COLM), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$78.76 and falling to the lows of US$70.43. 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 Columbia Sportswear's current trading price of US$71.63 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 Columbia Sportswear’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Columbia Sportswear Worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.8% below my intrinsic value, which means if you buy Columbia Sportswear today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $72.96, then there’s not much of an upside to gain from mispricing. In addition to this, Columbia Sportswear has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Columbia Sportswear 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. 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. With profit expected to grow by 29% over the next couple of years, the future seems bright for Columbia Sportswear. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? COLM’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 an eye on COLM, now may not be the most optimal 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.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 1 warning sign with Columbia Sportswear, and understanding this should be part of your investment process.
If you are no longer interested in Columbia Sportswear, you can use our free platform to see our 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. 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.