Is There Now An Opportunity In Freightways Limited (NZSE:FRE)?

Freightways Limited (NZSE:FRE), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NZSE over the last few months, increasing to NZ$10.92 at one point, and dropping to the lows of NZ$9.40. 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 Freightways' current trading price of NZ$9.70 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Freightways’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Our analysis indicates that FRE is potentially overvalued!

What's The Opportunity In Freightways?

According to my valuation model, Freightways seems to be fairly priced at around 6.60% above my intrinsic value, which means if you buy Freightways today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is NZ$9.10, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Freightways’s low beta implies that the stock is less volatile than the wider market.

What does the future of Freightways look like?

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. With profit expected to grow by 59% over the next couple of years, the future seems bright for Freightways. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? FRE’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 an eye on FRE, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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 Freightways as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 4 warning signs with Freightways, and understanding them should be part of your investment process.

If you are no longer interested in Freightways, 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.