What Does Howden Joinery Group Plc's (LON:HWDN) Share Price Indicate?

While Howden Joinery Group Plc (LON:HWDN) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the LSE, rising to highs of UK£7.29 and falling to the lows of UK£6.53. 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£6.94 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.

View our latest analysis for Howden Joinery Group

Is Howden Joinery Group Still Cheap?

According to my valuation model, Howden Joinery Group seems to be fairly priced at around 13.61% above my intrinsic value, which means if you buy Howden Joinery Group today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth £6.11, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Howden Joinery Group’s low beta implies that the stock is less volatile than the wider market.

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. 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 Howden Joinery Group, it is expected to deliver a negative earnings growth of -17%, 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? HWDN seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on HWDN for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on HWDN should the price fluctuate below its true value.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To that end, you should learn about the 2 warning signs we've spotted with Howden Joinery Group (including 1 which doesn't sit too well with us).

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.