Hyster-Yale Materials Handling, Inc. (NYSE:HY), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let's take a look at Hyster-Yale Materials Handling's outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Hyster-Yale Materials Handling
What's The Opportunity In Hyster-Yale Materials Handling?
According to my valuation model, the stock is currently overvalued by about 21%, trading at US$42.37 compared to my intrinsic value of $35.03. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Hyster-Yale Materials Handling'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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Hyster-Yale Materials Handling 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. Hyster-Yale Materials Handling's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? HY's optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe HY should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on HY for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there's no upside from mispricing. However, the optimistic prospect is encouraging for HY, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Hyster-Yale Materials Handling as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Hyster-Yale Materials Handling (of which 1 is a bit concerning!) you should know about.
If you are no longer interested in Hyster-Yale Materials Handling, 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.