Stock Analysis

Is There Now An Opportunity In Johnson Outdoors Inc. (NASDAQ:JOUT)?

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NasdaqGS:JOUT
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While Johnson Outdoors Inc. (NASDAQ:JOUT) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$73.32 at one point, and dropping to the lows of US$59.04. 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 Johnson Outdoors' current trading price of US$60.09 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Johnson Outdoors’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 Johnson Outdoors

What's The Opportunity In Johnson Outdoors?

Johnson Outdoors appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.51x is currently well-above the industry average of 8.88x, meaning that it is trading at a more expensive price relative to its peers. In addition to this, it seems like Johnson Outdoors’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Johnson Outdoors generate?

earnings-and-revenue-growth
NasdaqGS:JOUT Earnings and Revenue Growth September 2nd 2022

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. Johnson Outdoors' earnings over the next few years are expected to increase by 76%, 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 well and truly priced in JOUT’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe JOUT 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 an eye on JOUT for a while, 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 positive outlook is encouraging for JOUT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, Johnson Outdoors has 4 warning signs (and 1 which is significant) we think you should know about.

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

Valuation is complex, but we're helping make it simple.

Find out whether Johnson Outdoors is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NasdaqGS:JOUT

Johnson Outdoors

Johnson Outdoors Inc. designs, manufactures, and markets seasonal and outdoor recreational products for fishing worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth3
Past Performance1
Financial Health6
Dividends2

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet and fair value.