At US$41.15, Is It Time To Put nVent Electric plc (NYSE:NVT) On Your Watch List?

nVent Electric plc (NYSE:NVT), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on nVent Electric’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for nVent Electric

Is nVent Electric Still Cheap?

According to my valuation model, nVent Electric seems to be fairly priced at around 10.48% above my intrinsic value, which means if you buy nVent Electric today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $37.25, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since nVent Electric’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of nVent Electric 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 -1.5% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for nVent Electric. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? NVT seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on NVT for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on NVT should the price fluctuate below its true value.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - nVent Electric has 2 warning signs we think you should be aware of.

If you are no longer interested in nVent 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.