Is WSP Global Inc. (TSE:WSP) Potentially Undervalued?

By
Simply Wall St
Published
February 21, 2022
TSX:WSP
Source: Shutterstock

Today we're going to take a look at the well-established WSP Global Inc. (TSE:WSP). The company's stock saw significant share price movement during recent months on the TSX, rising to highs of CA$185 and falling to the lows of CA$150. 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 WSP Global's current trading price of CA$150 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at WSP Global’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for WSP Global

What is WSP Global worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.03% above my intrinsic value, which means if you buy WSP Global today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth CA$138.84, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because WSP Global’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 kind of growth will WSP Global generate?

earnings-and-revenue-growth
TSX:WSP Earnings and Revenue Growth February 21st 2022

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. With profit expected to grow by 54% over the next couple of years, the future seems bright for WSP Global. 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? WSP’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 tabs on WSP, now may not be the most optimal 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 further examining 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 WSP Global, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for WSP Global and you'll want to know about these.

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

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