Sypris Solutions Inc (NASDAQ:SYPR), a auto components company based in United States, saw a decent share price growth in the teens level on the NasdaqGM over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at SYPR’s outlook and value based on the most recent financial data to see if the opportunity still exists. View our latest analysis for Sypris Solutions
Is SYPR still cheap?
According to my relative valuation model, SYPR seems to be currently fairly priced. In this instance, I’ve used the price-to-book (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that SYPR’s ratio of 1.7x is trading slightly below its industry peers’ ratio of 1.9x, which means if you buy SYPR today, you’d be paying a relatively reasonable price for it. And if you believe that SYPR should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like SYPR’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because SYPR’s stock is less volatile than the wider market given its low beta.
What does the future of SYPR look like?
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. However, with a relatively muted revenue growth of 8.72% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for SYPR.
What this means for you:
Are you a shareholder? SYPR’s 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 track record of its management team. Have these factors changed since the last time you looked at SYPR? 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 SYPR, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive growth outlook may mean it’s worth diving deeper into other factors 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 Sypris Solutions. You can find everything you need to know about SYPR in the latest infographic research report. If you are no longer interested in Sypris Solutions, 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.