At US$59.02, Is The Brink's Company (NYSE:BCO) Worth Looking At Closely?

By
Simply Wall St
Published
October 26, 2021
NYSE:BCO
Source: Shutterstock

The Brink's Company (NYSE:BCO), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$79.87 and falling to the lows of US$58.99. 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 Brink's' current trading price of US$59.02 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 Brink's’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Brink's

Is Brink's still cheap?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Brink's’s ratio of 77.34x is above its peer average of 37.89x, which suggests the stock is trading at a higher price compared to the Commercial Services industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Brink's’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Brink's generate?

earnings-and-revenue-growth
NYSE:BCO Earnings and Revenue Growth October 27th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Brink's' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? BCO’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe BCO should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on BCO for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for BCO, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Brink's, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Brink's (1 is a bit concerning) you should be familiar with.

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

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