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While Fletcher Building Limited (NZSE:FBU) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NZSE over the last few months, increasing to NZ$5.50 at one point, and dropping to the lows of NZ$4.24. 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 Fletcher Building's current trading price of NZ$4.34 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 Fletcher Building’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Fletcher Building
What Is Fletcher Building Worth?
Great news for investors – Fletcher Building is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is NZ$6.60, but it is currently trading at NZ$4.34 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Fletcher Building’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 Fletcher Building 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 profit growth of 9.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Fletcher Building, at least in the short term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since FBU is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on FBU for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FBU. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.