Yahoo Finance Is There Now An Opportunity In Kronos Worldwide, Inc. (NYSE:KRO)?
While Kronos Worldwide, Inc. (NYSE:KRO) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the NYSE over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Kronos Worldwide’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Kronos Worldwide
Is Kronos Worldwide Still Cheap?
According to my valuation model, the stock is currently overvalued by about 22%, trading at US$9.82 compared to my intrinsic value of $8.04. This means that the opportunity to buy Kronos Worldwide at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Kronos Worldwide’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.
Can we expect growth from Kronos Worldwide?
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 an expected decline of -15% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Kronos Worldwide. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? If you believe KRO 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 risk from a negative growth outlook, 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 KRO for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative 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?
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. When we did our research, we found 2 warning signs for Kronos Worldwide (1 is a bit unpleasant!) that we believe deserve your full attention.
If you are no longer interested in Kronos 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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