Stock Analysis

Is It Too Late To Consider Buying Rush Enterprises, Inc. (NASDAQ:RUSH.A)?

NasdaqGS:RUSH.A
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Rush Enterprises, Inc. (NASDAQ:RUSH.A), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. The recent share price gains has brought the company back closer to its yearly peak. As a US$4.8b market-cap stock, it seems odd Rush Enterprises is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Rush Enterprises’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Rush Enterprises

Is Rush Enterprises Still Cheap?

According to our 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. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 15.81x is currently trading slightly below its industry peers’ ratio of 18.43x, which means if you buy Rush Enterprises today, you’d be paying a decent price for it. And if you believe that Rush Enterprises should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, it seems like Rush Enterprises’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Rush Enterprises?

earnings-and-revenue-growth
NasdaqGS:RUSH.A Earnings and Revenue Growth November 28th 2024

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted profit growth of 6.1% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Rush Enterprises, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in RUSH.A’s growth outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at RUSH.A? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on RUSH.A, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Rush Enterprises has 1 warning sign we think you should be aware of.

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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.