Why Redington Limited (NSE:REDINGTON) Could Be Worth Watching

Redington Limited (NSE:REDINGTON), is not the largest company out there, but it saw a significant share price rise of 34% in the past couple of months on the NSEI. The recent share price gains has brought the company back closer to its yearly peak. 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? Let’s take a look at Redington’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Redington

What's The Opportunity In Redington?

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 Redington today, you’d be paying a reasonable price for it. And if you believe the company’s true value is ₹286.96, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Redington’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Redington?

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. Redington's earnings over the next few years are expected to increase by 59%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? REDINGTON’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on REDINGTON, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

If you want to dive deeper into Redington, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Redington you should know about.

If you are no longer interested in Redington, 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.