Should You Think About Buying nVent Electric plc (NYSE:NVT) Now?

Let's talk about the popular nVent Electric plc (NYSE:NVT). The company's shares saw a decent share price growth of 12% on the NYSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the large-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? Let’s take a look at nVent Electric’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for nVent Electric

Is nVent Electric Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 0.85% above our 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 $77.66, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because nVent Electric’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of nVent Electric look like?

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 negative profit growth of -5.8% 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 an eye on NVT for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, 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 gel your views on NVT should the price fluctuate below its true value.

If you want to dive deeper into nVent Electric, you'd also look into what risks it is currently facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of nVent Electric.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com