Is Now The Time To Look At Buying Sleep Country Canada Holdings Inc. (TSE:ZZZ)?

Sleep Country Canada Holdings Inc. (TSE:ZZZ), might not be a large cap stock, but it saw a decent share price growth in the teens level on the TSX over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Sleep Country Canada Holdings’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Sleep Country Canada Holdings

What Is Sleep Country Canada Holdings Worth?

Great news for investors – Sleep Country Canada Holdings is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is CA$33.65, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Sleep Country Canada Holdings’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 Sleep Country Canada Holdings 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. However, with a negative profit growth of -3.5% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Sleep Country Canada Holdings. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although ZZZ is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ZZZ, 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 tabs on ZZZ for some time, but hesitant on making the leap, I recommend you dig deeper 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 Sleep Country Canada Holdings, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Sleep Country Canada Holdings you should know about.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.