Is It Too Late To Consider Buying Loomis AB (publ) (STO:LOOMIS)?

Loomis AB (publ) (STO:LOOMIS), is not the largest company out there, but it received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr320 at one point, and dropping to the lows of kr280. 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 Loomis' current trading price of kr308 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Loomis’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Loomis

Is Loomis Still Cheap?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Loomis’s ratio of 15.19x is trading in-line with its industry peers’ ratio, which means if you buy Loomis today, you’d be paying a relatively reasonable price for it. Is there another opportunity to buy low in the future? Since Loomis’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 does the future of Loomis 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. 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. Loomis' earnings over the next few years are expected to increase by 59%, 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? LOOMIS’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 LOOMIS? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on LOOMIS, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for LOOMIS, 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.

So while earnings quality is important, it's equally important to consider the risks facing Loomis at this point in time. In terms of investment risks, we've identified 1 warning sign with Loomis, and understanding it should be part of your investment process.

If you are no longer interested in Loomis, 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.