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Spin Master Corp (TSX:TOY), a leisure company based in Canada, saw significant share price volatility over the past couple of months on the TSX, rising to the highs of CA$59.18 and falling to the lows of CA$46.38. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Spin Master’s current trading price of CA$49.47 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 Spin Master’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Spin Master
What is Spin Master worth?
According to my valuation model, Spin Master seems to be fairly priced at around 9% above my intrinsic value, which means if you buy Spin Master today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is CA$45.35, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Spin Master’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Spin Master look like?
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. With profit expected to grow by 39.69% over the next couple of years, the future seems bright for Spin Master. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? TOY’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on TOY, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.