When Should You Buy Howden Joinery Group Plc (LON:HWDN)?

Howden Joinery Group Plc (LON:HWDN), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the LSE. 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 Howden Joinery Group’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Howden Joinery Group

What Is Howden Joinery Group Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11.21% 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 £5.19, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Howden Joinery Group has a low beta, which suggests its share price 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. 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. Though in the case of Howden Joinery Group, it is expected to deliver a negative earnings growth of -14%, 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 beneficial 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 price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, 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 gel your views on HWDN should the price fluctuate below its true value.

If you want to dive deeper into Howden Joinery Group, you'd also look into what risks it is currently facing. Be aware that Howden Joinery Group is showing 2 warning signs in our investment analysis and 1 of those shouldn't be ignored...

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.