Quanex Building Products Corporation (NYSE:NX), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Quanex Building Products’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Quanex Building Products worth?
According to my valuation model, Quanex Building Products seems to be fairly priced at around 12.74% above my intrinsic value, which means if you buy Quanex Building Products today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $17.72, 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 Quanex Building Products’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 kind of growth will Quanex Building Products generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted revenue growth of 9.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Quanex Building Products, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in NX’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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on NX, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about Quanex Building Products as a business, it's important to be aware of any risks it's facing. When we did our research, we found 2 warning signs for Quanex Building Products (1 is potentially serious!) that we believe deserve your full attention.
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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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