Hibbett, Inc. (NASDAQ:HIBB), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Hibbett’s outlook and valuation to see if the opportunity still exists.
What is Hibbett worth?
The stock is currently trading at US$94.92 on the share market, which means it is overvalued by 25% compared to my intrinsic value of $75.73. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Hibbett’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.
Can we expect growth from Hibbett?
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. Though in the case of Hibbett, it is expected to deliver a negative earnings growth of -7.4%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? If you believe HIBB is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to de-risk your portfolio. 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 HIBB for a while, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
If you'd like to know more about Hibbett as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Hibbett you should be mindful of and 2 of these are potentially serious.
If you are no longer interested in Hibbett, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
What are the risks and opportunities for Hibbett?
Trading at 80.1% below our estimate of its fair value
Earnings are forecast to grow 13.11% per year
High level of non-cash earnings
Profit margins (6.6%) are lower than last year (10.7%)
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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