Stock Analysis

Is Now The Time To Look At Buying Trinseo PLC (NYSE:TSE)?

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NYSE:TSE
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Trinseo PLC (NYSE:TSE), 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$58.64 and falling to the lows of US$41.63. 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 Trinseo's current trading price of US$43.86 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 Trinseo’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Trinseo

What's the opportunity in Trinseo?

Great news for investors – Trinseo is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to 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 6.87x is currently well-below the industry average of 16.82x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Trinseo’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 Trinseo generate?

earnings-and-revenue-growth
NYSE:TSE Earnings and Revenue Growth May 25th 2022

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. Though in the case of Trinseo, it is expected to deliver a relatively unexciting top-line growth of 1.8% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since TSE is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on TSE for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TSE. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

If you'd like to know more about Trinseo as a business, it's important to be aware of any risks it's facing. To help with this, we've discovered 6 warning signs (2 are concerning!) that you ought to be aware of before buying any shares in Trinseo.

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

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