Stock Analysis

Is It Time To Consider Buying Associated British Foods plc (LON:ABF)?

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LSE:ABF
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Associated British Foods plc (LON:ABF) led the LSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the large-cap 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? Let’s examine Associated British Foods’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Associated British Foods

What's the opportunity in Associated British Foods?

Great news for investors – Associated British Foods is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is £29.12, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Associated British Foods’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Associated British Foods?

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LSE:ABF Earnings and Revenue Growth November 30th 2020

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. 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. Associated British Foods' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since ABF is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on ABF for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ABF. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Associated British Foods has 1 warning sign we think you should be aware of.

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