Today we're going to take a look at the well-established Stryker Corporation (NYSE:SYK). The company's stock saw significant share price movement during recent months on the NYSE, rising to highs of US$359 and falling to the lows of US$308. 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 Stryker's current trading price of US$337 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 Stryker'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 Stryker?
The stock seems fairly valued at the moment according to our valuation model. It's trading around 1.15% above our intrinsic value, which means if you buy Stryker today, you'd be paying a relatively reasonable price for it. And if you believe the company's true value is $333.33, then there isn't really any room for the share price grow beyond what it's currently trading. In addition to this, Stryker has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Stryker 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. 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. With profit expected to grow by 55% over the next couple of years, the future seems bright for Stryker. 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? SYK's optimistic 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 an eye on SYK, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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. While conducting our analysis, we found that Stryker has 2 warning signs and it would be unwise to ignore these.
If you are no longer interested in Stryker, 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.