Today we're going to take a look at the well-established Aptiv PLC (NYSE:APTV). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$90.47 at one point, and dropping to the lows of US$76.20. 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 Aptiv's current trading price of US$77.81 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Aptiv's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Aptiv Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It's trading around 1.9% below our intrinsic value, which means if you buy Aptiv today, you'd be paying a fair price for it. And if you believe the company's true value is $79.35, then there's not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Aptiv'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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Aptiv?
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. Though in the case of Aptiv, it is expected to deliver a highly negative earnings growth in the next few years, which doesn't help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? APTV seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping tabs on APTV for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there's less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help crystalize your views on APTV should the price fluctuate below its true value.
If you'd like to know more about Aptiv as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Aptiv you should be mindful of and 1 of these makes us a bit uncomfortable.
If you are no longer interested in Aptiv, 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.