Should You Investigate Masonite International Corporation (NYSE:DOOR) At US$91.66?

Masonite International Corporation (NYSE:DOOR), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a mid-cap 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 examine Masonite International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Masonite International

What's The Opportunity In Masonite International?

Great news for investors – Masonite International is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $116.26, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Masonite International’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Masonite International 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. However, with a negative profit growth of -0.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Masonite International. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although DOOR is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to DOOR, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on DOOR for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 1 warning sign for Masonite International and you'll want to know about it.

If you are no longer interested in Masonite International, 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.