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Strattec Security Corporation (NASDAQ:STRT), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$51.49 and falling to the lows of US$36.42. 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 Strattec Security's current trading price of US$39.78 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 Strattec Security’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Strattec Security Still Cheap?
Great news for investors – Strattec Security is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.28x is currently well-below the industry average of 14.42x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Strattec Security’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.
Check out our latest analysis for Strattec Security
What does the future of Strattec Security look like?
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. 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. Though in the case of Strattec Security, it is expected to deliver a negative earnings growth of -1.7%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Although STRT is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to STRT, or whether diversifying into another stock may be a better move for your total risk and return.