Should You Think About Buying Valmont Industries, Inc. (NYSE:VMI) Now?

Valmont Industries, Inc. (NYSE:VMI), 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$319 and falling to the lows of US$262. 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 Valmont Industries' current trading price of US$287 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Valmont Industries’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Valmont Industries

What Is Valmont Industries Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.8% below my intrinsic value, which means if you buy Valmont Industries today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $311.39, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Valmont Industries’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 Valmont Industries 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. In the upcoming year, Valmont Industries' earnings are expected to increase by 25%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in VMI’s positive 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on VMI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which 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.

So while earnings quality is important, it's equally important to consider the risks facing Valmont Industries at this point in time. For example - Valmont Industries has 1 warning sign we think you should be aware of.

If you are no longer interested in Valmont Industries, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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

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.