Sealed Air Corporation (NYSE:SEE), which is in the packaging business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $44.07 at one point, and dropping to the lows of $36.13. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Sealed Air’s current trading price of $36.13 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 Sealed Air’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Sealed Air?The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.70% above my intrinsic value, which means if you buy Sealed Air today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $35.88, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Sealed Air’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 kind of growth will Sealed Air generate?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. 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. With revenues expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Sealed Air. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SEE’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 track record of its management team. 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 tabs on SEE, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Sealed Air. You can find everything you need to know about Sealed Air in the latest infographic research report. If you are no longer interested in Sealed Air, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.