When Should You Buy Frasers Group plc (LON:FRAS)?

Frasers Group plc (LON:FRAS), might not be a large cap stock, but it saw a decent share price growth in the teens level on the LSE over the last few months. 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, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Frasers Group’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Frasers Group

Is Frasers Group Still Cheap?

According to my valuation model, Frasers Group seems to be fairly priced at around 6.00% above my intrinsic value, which means if you buy Frasers Group today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth £7.54, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Frasers Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Frasers Group?

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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Frasers Group, at least in the near future.

What This Means For You

Are you a shareholder? FRAS 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 FRAS 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. 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 FRAS should the price fluctuate below its true value.

If you'd like to know more about Frasers Group as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Frasers Group you should know about.

If you are no longer interested in Frasers 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.