Is It Too Late To Consider Buying Hillenbrand, Inc. (NYSE:HI)?

Hillenbrand, Inc. (NYSE:HI), which is in the machinery business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a US$2.5b market cap stock, it seems odd Hillenbrand is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Hillenbrand’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Hillenbrand

What is Hillenbrand worth?

Great news for investors – Hillenbrand is still trading at a fairly cheap price. I’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 17.17x is currently well-below the industry average of 22.82x, meaning that it is trading at a cheaper price relative to its peers. However, given that Hillenbrand’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Hillenbrand generate?

NYSE:HI Past and Future Earnings, January 10th 2020
NYSE:HI Past and Future Earnings, January 10th 2020

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 4.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Hillenbrand, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since HI 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 HI 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 HI. 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 investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Hillenbrand. You can find everything you need to know about Hillenbrand in the latest infographic research report. If you are no longer interested in Hillenbrand, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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