Should You Think About Buying MAV Beauty Brands Inc. (TSE:MAV) Now?

MAV Beauty Brands Inc. (TSE:MAV), is not the largest company out there, but it led the TSX gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at MAV Beauty Brands’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for MAV Beauty Brands

What's the opportunity in MAV Beauty Brands?

MAV Beauty Brands appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that MAV Beauty Brands’s ratio of 18.47x is above its peer average of 9.23x, which suggests the stock is trading at a higher price compared to the Personal Products industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since MAV Beauty Brands’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of MAV Beauty Brands look like?

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. In the upcoming year, MAV Beauty Brands' earnings are expected to increase by 88%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in MAV’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe MAV should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 an eye on MAV for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for MAV, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing MAV Beauty Brands at this point in time. To that end, you should learn about the 3 warning signs we've spotted with MAV Beauty Brands (including 1 which doesn't sit too well with us).

If you are no longer interested in MAV Beauty Brands, 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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