At kr490, Is It Time To Put Alfa Laval Corporate AB (STO:ALFA) On Your Watch List?

Alfa Laval Corporate AB (STO:ALFA) received a lot of attention from a substantial price increase on the OM over the last few months. The recent jump in the share price has meant that the company is trading at close to its 52-week high. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Alfa Laval’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Alfa Laval

Is Alfa Laval Still Cheap?

According to our valuation model, Alfa Laval seems to be fairly priced at around 7.85% above our intrinsic value, which means if you buy Alfa Laval today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth SEK454.43, 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 Alfa Laval’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.

Can we expect growth from Alfa Laval?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 48% over the next couple of years, the future seems bright for Alfa Laval. 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? It seems like the market has already priced in ALFA’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 an eye on ALFA, now may not be the most optimal 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Alfa Laval at this point in time. At Simply Wall St, we found 1 warning sign for Alfa Laval and we think they deserve your attention.

If you are no longer interested in Alfa Laval, 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.