Should You Buy BAE Systems plc (LON:BA.) At £5.912?

Let's talk about the popular BAE Systems plc (LSE:BA.). The company's shares maintained its current share price over the past couple of month on the LSE, with a relatively tight range of £5.42 to £5.94. However, does this price actually reflect the true value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at BAE Systems’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for BAE Systems

What's the opportunity in BAE Systems?

According to my valuation model, BAE Systems seems to be fairly priced at around 13.22% below my intrinsic value, which means if you buy BAE Systems today, you’d be paying a fair price for it. And if you believe the company’s true value is £6.81, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like BAE Systems’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

What does the future of BAE Systems look like?

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. 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 a double-digit 15.29% over the next couple of years, the outlook is positive for BAE Systems. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? BA.’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on BA., now may not be the most advantageous 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on BAE Systems. You can find everything you need to know about BAE Systems in the latest infographic research report. If you are no longer interested in BAE Systems, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.