At NZ$36.64, Is Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH) Worth Looking At Closely?

Today we're going to take a look at the well-established Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH). The company's stock received a lot of attention from a substantial price movement on the NZSE over the last few months, increasing to NZ$38.50 at one point, and dropping to the lows of NZ$35.00. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Fisher & Paykel Healthcare's current trading price of NZ$36.64 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Fisher & Paykel Healthcare’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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What's The Opportunity In Fisher & Paykel Healthcare?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Fisher & Paykel Healthcare’s ratio of 57.04x is above its peer average of 42.45x, which suggests the stock is trading at a higher price compared to the Medical Equipment industry. Furthermore, Fisher & Paykel Healthcare’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 levels around its industry peers, 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.

View our latest analysis for Fisher & Paykel Healthcare

Can we expect growth from Fisher & Paykel Healthcare?

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. Fisher & Paykel Healthcare's earnings over the next few years are expected to increase by 58%, 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? It seems like the market has well and truly priced in FPH’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe FPH should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on FPH for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for FPH, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Fisher & Paykel Healthcare, 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.