Let's talk about the popular Stryker Corporation (NYSE:SYK). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$392 and falling to the lows of US$345. 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$375 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 Is Stryker Worth?
According to our valuation model, Stryker seems to be fairly priced at around 4.18% above our intrinsic value, which means if you buy Stryker today, you'd be paying a relatively fair price for it. And if you believe that the stock is really worth $359.58, then there isn't really any room for the share price grow beyond what it's currently trading. What's more, Stryker's share price may be more stable over time (relative to the market), as indicated by its low beta.
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 37% 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? It seems like the market has already priced in SYK'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 an eye on SYK, now may not be the most advantageous 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.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 2 warning signs for Stryker you should be aware of.
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.
