Stock Analysis

What Is West Fraser Timber Co. Ltd.'s (TSE:WFG) Share Price Doing?

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TSX:WFG
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West Fraser Timber Co. Ltd. (TSE:WFG), is not the largest company out there, but it saw a decent share price growth in the teens level on the TSX over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on West Fraser Timber’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for West Fraser Timber

What is West Fraser Timber worth?

Good news, investors! West Fraser Timber is still a bargain right now. According to my valuation, the intrinsic value for the stock is CA$142.96, but it is currently trading at CA$108 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because West Fraser Timber’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 West Fraser Timber look like?

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TSX:WFG Earnings and Revenue Growth July 19th 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. Though in the case of West Fraser Timber, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although WFG is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to WFG, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on WFG for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into West Fraser Timber, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of West Fraser Timber.

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

Valuation is complex, but we're helping make it simple.

Find out whether West Fraser Timber is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About TSX:WFG

West Fraser Timber

West Fraser Timber Co. Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy.

Flawless balance sheet average dividend payer.