Should You Think About Buying ADBRI Limited (ASX:ABC) Now?

ADBRI Limited (ASX:ABC), might not be a large cap stock, but it led the ASX gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at ADBRI’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for ADBRI

What is ADBRI worth?

According to my valuation model, ADBRI seems to be fairly priced at around 17.31% above my intrinsic value, which means if you buy ADBRI today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is A$2.92, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that ADBRI’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will ADBRI generate?

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 a double-digit 13% over the next couple of years, the outlook is positive for ADBRI. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in ABC’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 tabs on ABC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

If you want to dive deeper into ADBRI, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for ADBRI and you'll want to know about these.

If you are no longer interested in ADBRI, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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