Is Now The Time To Look At Buying Barnes & Noble Education, Inc. (NYSE:BNED)?

Barnes & Noble Education, Inc. (NYSE:BNED), which is in the specialty retail business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. 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 Barnes & Noble Education’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Barnes & Noble Education

What is Barnes & Noble Education worth?

According to my valuation model, Barnes & Noble Education seems to be fairly priced at around 17.57% above my intrinsic value, which means if you buy Barnes & Noble Education today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $3.32, 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 Barnes & Noble Education’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 does the future of Barnes & Noble Education look like?

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. However, with an expected decline of -3.0% in revenues over the next year, short term growth isn’t a driver for a buy decision for Barnes & Noble Education. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? BNED seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on BNED for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on BNED should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Barnes & Noble Education. You can find everything you need to know about Barnes & Noble Education in the latest infographic research report. If you are no longer interested in Barnes & Noble Education, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.