Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$3.48 and falling to the lows of US$2.06. 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 Petco Health and Wellness Company's current trading price of US$2.06 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 Petco Health and Wellness Company's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In Petco Health and Wellness Company?
The stock seems fairly valued at the moment according to our valuation model. It's trading around 18% below our intrinsic value, which means if you buy Petco Health and Wellness Company today, you'd be paying a reasonable price for it. And if you believe the company's true value is $2.52, then there's not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Petco Health and Wellness Company'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 kind of growth will Petco Health and Wellness Company generate?
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. Petco Health and Wellness Company's earnings over the next few years are expected to increase by 99%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in WOOF's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. 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 WOOF, now may not be the most optimal 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.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 1 warning sign for Petco Health and Wellness Company and you'll want to know about this.
If you are no longer interested in Petco Health and Wellness Company, 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.