While Koppers Holdings Inc. (NYSE:KOP) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NYSE over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. 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? Today we will analyse the most recent data on Koppers Holdings's outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Koppers Holdings
Is Koppers Holdings Still Cheap?
Good news, investors! Koppers Holdings is still a bargain right now according to our price multiple model, which compares 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 Koppers Holdings's ratio of 10.73x is below its peer average of 21.13x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What's more interesting is that, Koppers Holdings'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 kind of growth will Koppers Holdings generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 relatively muted profit growth of 6.9% expected over the next year, growth doesn't seem like a key driver for a buy decision for Koppers Holdings, at least in the short term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since KOP is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you've been keeping an eye on KOP for a while, now might be the time to make a leap. Its future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy KOP. 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 assessment.
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, we've found that Koppers Holdings has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.
If you are no longer interested in Koppers 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.