Is Now The Time To Look At Buying Howden Joinery Group Plc (LON:HWDN)?

Howden Joinery Group Plc (LON:HWDN), might not be a large cap stock, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£9.78 and falling to the lows of UK£8.05. 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 Howden Joinery Group's current trading price of UK£8.13 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Howden Joinery Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Howden Joinery Group

What Is Howden Joinery Group Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 12% below our intrinsic value, which means if you buy Howden Joinery Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth £9.21, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Howden Joinery Group’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.

Can we expect growth from Howden Joinery Group?

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. With profit expected to grow by a double-digit 18% over the next couple of years, the outlook is positive for Howden Joinery Group. 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? HWDN’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 HWDN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

So while earnings quality is important, it's equally important to consider the risks facing Howden Joinery Group at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Howden Joinery Group.

If you are no longer interested in Howden Joinery Group, 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. 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.