GMS Inc. (NYSE:GMS), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. But what if there is still an opportunity to buy? Let's take a look at GMS's outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for GMS

What Is GMS Worth?

Good news, investors! GMS is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $71.91, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What's more interesting is that, GMS's share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 GMS look like?

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. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn't appear to be a driver for a buy decision for GMS. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although GMS is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to GMS, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you've been keeping tabs on GMS for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, GMS has 3 warning signs (and 1 which is concerning) we think you should know about.

If you are no longer interested in GMS, 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.