Yahoo Finance Is It Too Late To Consider Buying BlueLinx Holdings Inc. (NYSE:BXC)?
BlueLinx Holdings Inc. (NYSE:BXC), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$131 and falling to the lows of US$99.88. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether BlueLinx Holdings' current trading price of US$103 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at BlueLinx Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for BlueLinx Holdings
Is BlueLinx Holdings Still Cheap?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that BlueLinx Holdings’s ratio of 18.42x is trading slightly above its industry peers’ ratio of 17.82x, which means if you buy BlueLinx Holdings today, you’d be paying a relatively reasonable price for it. And if you believe BlueLinx Holdings should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since BlueLinx Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.
What does the future of BlueLinx Holdings look like?
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. With profit expected to grow by 33% over the next year, the near-term future seems bright for BlueLinx Holdings. 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? It seems like the market has already priced in BXC’s positive outlook, with shares trading around industry price multiples. 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 BXC? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you’ve been keeping tabs on BXC, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for BXC, 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.
If you want to dive deeper into BlueLinx Holdings, you'd also look into what risks it is currently facing. For example - BlueLinx Holdings has 3 warning signs we think you should be aware of.
If you are no longer interested in BlueLinx Holdings, 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.
