Should You Think About Buying Designer Brands Inc. (NYSE:DBI) Now?

Designer Brands Inc. (NYSE:DBI), is not the largest company out there, but it saw a significant share price rise of 38% in the past couple of months on the NYSE. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps tend to present 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? Let’s take a look at Designer Brands’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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Is Designer Brands Still Cheap?

Great news for investors – Designer Brands is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is $7.21, but it is currently trading at US$4.36 on the share market, meaning that there is still an opportunity to buy now. However, given that Designer Brands’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

View our latest analysis for Designer Brands

What kind of growth will Designer Brands generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted revenue growth of 3.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Designer Brands, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since DBI is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on DBI for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DBI. 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 buy.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. When we did our research, we found 3 warning signs for Designer Brands (1 is a bit concerning!) that we believe deserve your full attention.

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

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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.