At JP¥921, Is Sharp Corporation (TSE:6753) Worth Looking At Closely?

Sharp Corporation (TSE:6753), might not be a large cap stock, but it saw a decent share price growth of 17% on the TSE over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Sharp’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Sharp

What's The Opportunity In Sharp?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 18.22% above our intrinsic value, which means if you buy Sharp today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth ¥778.96, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Sharp’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Sharp generate?

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. 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 Sharp, it is expected to deliver a negative revenue growth of -15% over the next couple of years, 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? 6753 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 tabs on 6753 for a while, now may not be the most advantageous 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 6753 should the price fluctuate below its true value.

It can be quite valuable to consider what analysts expect for Sharp from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Sharp, 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.