Clearwater Paper Corporation (NYSE:CLW), which is in the forestry business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $20.29 at one point, and dropping to the lows of $16.11. 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 Clearwater Paper’s current trading price of $16.93 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 Clearwater Paper’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Clearwater Paper?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 18% below my intrinsic value, which means if you buy Clearwater Paper today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $20.64, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Clearwater Paper’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Clearwater Paper 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 4.1% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for Clearwater Paper.
What this means for you:
Are you a shareholder? CLW’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 the stock? 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 CLW, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, 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 Clearwater Paper. You can find everything you need to know about Clearwater Paper in the latest infographic research report. If you are no longer interested in Clearwater Paper, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.