Why Hyster-Yale Materials Handling, Inc. (NYSE:HY) Could Be Worth Watching

Hyster-Yale Materials Handling, Inc. (NYSE:HY), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$57.70 and falling to the lows of US$45.35. 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 Hyster-Yale Materials Handling's current trading price of US$45.35 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Hyster-Yale Materials Handling’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 Hyster-Yale Materials Handling

Is Hyster-Yale Materials Handling Still Cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 Hyster-Yale Materials Handling’s ratio of 22.13x is trading slightly above its industry peers’ ratio of 19.82x, which means if you buy Hyster-Yale Materials Handling today, you’d be paying a relatively reasonable price for it. And if you believe that Hyster-Yale Materials Handling should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. So, is there another chance to buy low in the future? Given that Hyster-Yale Materials Handling’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Hyster-Yale Materials Handling?

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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double in the upcoming, the future appears to be extremely bright for Hyster-Yale Materials Handling. 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? HY’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 HY? 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 tabs on HY, 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 HY, 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Hyster-Yale Materials Handling has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Hyster-Yale Materials Handling, 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.