Should You Think About Buying Richelieu Hardware Ltd. (TSE:RCH) Now?

Richelieu Hardware Ltd. (TSE:RCH), might not be a large cap stock, but it saw its share price hover around a small range of CA$34.20 to CA$37.50 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Richelieu Hardware’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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What's The Opportunity In Richelieu Hardware?

Richelieu Hardware appears to be overvalued by 27% at the moment, based on our discounted cash flow valuation. The stock is currently priced at CA$35.34 on the market compared to our intrinsic value of CA$27.74. This means that the opportunity to buy Richelieu Hardware at a good price has disappeared! In addition to this, it seems like Richelieu Hardware’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

See our latest analysis for Richelieu Hardware

Can we expect growth from Richelieu Hardware?

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. 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. Though in the case of Richelieu Hardware, it is expected to deliver a relatively unexciting earnings growth of 6.0%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Richelieu Hardware, at least in the near term.

What This Means For You

Are you a shareholder? RCH’s future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RCH should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on RCH for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for Richelieu Hardware and you'll want to know about this.

If you are no longer interested in Richelieu Hardware, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.