Should You Think About Buying Quanex Building Products Corporation (NYSE:NX) Now?

Quanex Building Products Corporation (NYSE:NX), is not the largest company out there, but it saw a decent share price growth of 17% on the NYSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Quanex Building Products’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Quanex Building Products

What Is Quanex Building Products Worth?

According to our valuation model, Quanex Building Products seems to be fairly priced at around 9.68% above our 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 $27.95, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Quanex Building Products’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.

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. 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 an expected decline of -0.4% in revenues over the next year, short term growth isn’t a driver for a buy decision for Quanex Building Products. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, NX appears to be trading around its fair value, 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 NX 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 crystalize your views on NX should the price fluctuate below its true value.

It can be quite valuable to consider what analysts expect for Quanex Building Products from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Quanex Building Products, 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