Should You Think About Buying Franklin Electric Co., Inc. (NASDAQ:FELE) Now?

Franklin Electric Co., Inc. (NASDAQ:FELE), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$99.60 at one point, and dropping to the lows of US$90.46. 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 Franklin Electric's current trading price of US$96.16 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 Franklin Electric’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 Is Franklin Electric Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 6.3% below our intrinsic value, which means if you buy Franklin Electric today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $102.61, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Franklin Electric’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

View our latest analysis for Franklin Electric

Can we expect growth from Franklin Electric?

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. With profit expected to grow by 46% over the next year, the near-term future seems bright for Franklin Electric. 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 FELE’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 FELE, 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.

If you want to dive deeper into Franklin Electric, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Franklin Electric, and understanding this should be part of your investment process.

If you are no longer interested in Franklin Electric, 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.