Is Worthington Enterprises Fairly Priced After This Month’s 8% Drop?

• Curious if Worthington Enterprises is a hidden gem or just fairly priced? You're not alone, as investors are watching closely to see if there's real value beneath the surface.
• The stock has had a rollercoaster month, dipping 5.1% in the past week and 8.2% over the last 30 days. Still, it's boasting a strong 34.8% gain year-to-date as well as a 34.6% return over the last year.
• Recent headlines around Worthington Enterprises have focused on broader industrial sector volatility and company-specific strategic initiatives. Both of these factors are drawing renewed attention from the market. Moves such as new product launches and potential M&A activity are adding context to the latest price swings.
• On traditional valuation checks, Worthington Enterprises clocks a score of 3 out of 6, indicating it is undervalued on half of the major measures investors care about. In the next section, we'll dig into those approaches, and there's an even smarter way to judge whether the stock is really good value.

Worthington Enterprises delivered 34.6% returns over the last year. See how this stacks up to the rest of the Machinery industry.

Approach 1: Worthington Enterprises Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the present value of a company by projecting its future free cash flows and discounting them back to today. This approach provides an intrinsic valuation based on the company's ability to generate future cash.

For Worthington Enterprises, the DCF analysis starts with its current Free Cash Flow (FCF) of $115.8 Million. Analysts have provided detailed projections for the next five years, forecasting consistent growth in FCF. For example, FCF is expected to reach $278 Million by 2030. Beyond analyst estimates, Simply Wall St extrapolates figures through 2035, indicating continued, although slower, growth.

Using a 2 Stage Free Cash Flow to Equity model, these cash flows are discounted back to reflect their value today. According to this DCF model, the estimated intrinsic value for Worthington Enterprises is $92.97 per share. This figure implies the stock is currently trading at a 43.5% discount relative to its DCF-based intrinsic value, indicating it is significantly undervalued by the market at this time.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Worthington Enterprises is undervalued by 43.5%. Track this in your watchlist or portfolio, or discover 916 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Worthington Enterprises.

Approach 2: Worthington Enterprises Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is one of the most widely used tools to value profitable companies like Worthington Enterprises. It compares the company's current share price to its per-share earnings, giving investors a quick way to assess whether a stock is expensive or cheap relative to its earnings power.

A "normal" or fair PE ratio depends on several factors, such as how fast a company is expected to grow its earnings and how risky those earnings may be in the future. Higher growth expectations or a more stable business typically support higher PE multiples. In contrast, slower growth or greater risks suggest a lower PE is appropriate.

Worthington Enterprises currently trades at a PE ratio of 24.38x. This sits slightly above the Machinery industry average of 23.13x, but below the average for direct peers at 30.47x. While it is helpful to see where the company stacks up against these relevant benchmarks, these comparisons alone can miss important nuances, such as growth prospects and company-specific risks.

That is where Simply Wall St's proprietary "Fair Ratio" comes in. For Worthington Enterprises, the Fair PE Ratio is 24.35x. This figure takes into account not only the company's earnings growth forecasts and current profit margins but also industry dynamics, market capitalization, and specific business risks. This makes the Fair Ratio a much more tailored and holistic measure than simply comparing the company to peers or the sector.

Looking at the numbers side by side, Worthington Enterprises’ actual PE ratio (24.38x) is almost identical to its Fair Ratio (24.35x). This suggests that, based on earnings and the characteristics unique to the company, the stock is trading at about fair value right now.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1422 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Worthington Enterprises Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple and powerful approach that allows you to create your own story about a company, specifying what you think is a fair value and making your own estimates for future revenue, earnings, and margins. Essentially, it's your evidence-based perspective brought to life through numbers.

This method connects your view of a company’s story to a concrete financial forecast and, ultimately, to a fair value, bridging the gap between qualitative insights and quantitative analysis. Narratives are easy to use and integrated directly into the Community page on Simply Wall St, where millions of investors share their perspectives.

By creating or exploring Narratives, you can clearly see when your personal Fair Value suggests a stock is underpriced or overpriced compared to the current market, helping you decide whether to buy, hold, or sell. Even better, Narratives update automatically as new news or financial results come in, keeping your view fresh and relevant.

For Worthington Enterprises, for example, one investor’s Narrative might forecast explosive growth and assign a Fair Value as high as $81.00 per share. A more cautious view, factoring in industry risks, might justify a Fair Value of just $50.00, showing how the right Narrative can make all the difference in your investment outlook.

Do you think there's more to the story for Worthington Enterprises? Head over to our Community to see what others are saying!

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.

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