Why Cubic Corporation (NYSE:CUB) Could Be Worth Watching

While Cubic Corporation (NYSE:CUB) might not be the most widely known stock at the moment, it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Cubic’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Cubic

Is Cubic still cheap?

According to my valuation model, Cubic seems to be fairly priced at around 1.88% above my intrinsic value, which means if you buy Cubic today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $58.96, there’s only an insignificant downside when the price falls to its real value. Furthermore, Cubic’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Cubic?

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. Though in the case of Cubic, it is expected to deliver a relatively unexciting top-line growth of 8.8% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in CUB’s future outlook, with shares trading around its fair value. 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 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 CUB, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've found that Cubic has 2 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.

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This article by Simply Wall St is general in nature. 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.
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