Let's talk about the popular TopBuild Corp. (NYSE:BLD). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$447 and falling to the lows of US$369. 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 TopBuild's current trading price of US$397 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 TopBuild's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is TopBuild Still Cheap?
According to our valuation model, TopBuild seems to be fairly priced at around 3.5% below our intrinsic value, which means if you buy TopBuild today, you'd be paying a fair price for it. And if you believe the company's true value is $410.89, then there isn't much room for the share price grow beyond what it's currently trading. So, is there another chance to buy low in the future? Given that TopBuild'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.
What kind of growth will TopBuild generate?
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. 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. However, with a relatively muted profit growth of 6.0% expected over the next year, growth doesn't seem like a key driver for a buy decision for TopBuild, at least in the short term.
What This Means For You
Are you a shareholder? BLD's future growth appears to have been factored into the current share price, 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 confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you've been keeping tabs on BLD, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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. Every company has risks, and we've spotted 1 warning sign for TopBuild you should know about.
If you are no longer interested in TopBuild, 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.