Yahoo Finance When Should You Buy Reliance Worldwide Corporation Limited (ASX:RWC)?
While Reliance Worldwide Corporation Limited (ASX:RWC) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the ASX over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Reliance Worldwide’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Reliance Worldwide
What Is Reliance Worldwide Worth?
According to my valuation model, Reliance Worldwide seems to be fairly priced at around 17% below my intrinsic value, which means if you buy Reliance Worldwide today, you’d be paying a fair price for it. And if you believe the company’s true value is A$5.09, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Reliance Worldwide’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Reliance Worldwide?
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 profit expected to grow by 23% over the next couple of years, the future seems bright for Reliance Worldwide. 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? RWC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on RWC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.
So while earnings quality is important, it's equally important to consider the risks facing Reliance Worldwide at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Reliance Worldwide.
If you are no longer interested in Reliance Worldwide, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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