While Polaris Inc. (NYSE:PII) might not have the largest market cap around , it saw significant share price movement during recent months on the NYSE, rising to highs of US$100 and falling to the lows of US$83.28. 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 Polaris' current trading price of US$83.71 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Polaris'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 Polaris?
The stock seems fairly valued at the moment according to our valuation model. It's trading around 15.53% above our intrinsic value, which means if you buy Polaris today, you'd be paying a relatively reasonable price for it. And if you believe the company's true value is $72.46, then there isn't really any room for the share price grow beyond what it's currently trading. Although, there may be an opportunity to buy in the future. This is because Polaris's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Polaris 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. With profit expected to grow by 30% over the next couple of years, the future seems bright for Polaris. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in PII'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 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 PII, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Polaris at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Polaris.
If you are no longer interested in Polaris, 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.