Is It Too Late To Consider Buying Fletcher Building Limited (NZSE:FBU)?

Fletcher Building Limited (NZSE:FBU), is not the largest company out there, but it saw a decent share price growth of 11% on the NZSE 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 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 Fletcher Building’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Fletcher Building

Is Fletcher Building Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 5.4% below our intrinsic value, which means if you buy Fletcher Building today, you’d be paying a fair price for it. And if you believe that the stock is really worth NZ$3.31, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Fletcher Building’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.

What kind of growth will Fletcher Building generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Fletcher Building's 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? It seems like the market has already priced in FBU’s positive outlook, 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 FBU, 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'd like to know more about Fletcher Building as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 4 warning signs for Fletcher Building and we think they deserve your attention.

If you are no longer interested in Fletcher Building, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com