Is it too late to consider buying JD Sports Fashion plc (LON:JD.)?
Although JD Sports Fashion plc (LON: JD.) may not be the best-known stock at the moment, it has garnered a lot of attention due to substantial price movement on the LSE over the past few months. past few months, rising to UK£1.42 at some point. point, and falling as low as £0.89 in the UK. Certain movements in the stock price can give investors a better opportunity to get into the stock and potentially buy at a lower price. A question that needs to be answered is whether JD Sports Fashion’s current trading price of £0.97 in the UK reflects the true value of the mid cap? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at JD Sports Fashion’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check opportunities and risks within the UK specialist retail industry.
Is JD Sports fashion always cheap?
According to my multiple price model, where I compare the company’s price-earnings ratio to the industry average, the stock currently looks expensive. In this case, I used the Price/Earnings (PE) ratio since there is not enough information to reliably predict the stock’s cash flow. I find JD Sports Fashion’s ratio of 15.35x to be above its average of 6.51x, suggesting that the stock is trading at a higher price compared to the specialty retail sector. If you like the action, you might want to keep an eye out for a potential price drop going forward. Since JD Sports Fashion’s stock price is quite volatile, this could mean that it may go down (or up even more) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator of how the stock is doing relative to the rest of the market.
What growth will JD Sports Fashion generate?
Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to more than double over the next two years, the future looks bright for JD Sports Fashion. It seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you
Are you a shareholder? It looks like the market has well and truly priced in JD.’s positive outlook, with the stock trading above industry price multiples. At this current price, shareholders may ask a different question: should I sell? If you believe JD. should trade below its current price, sell at a high price and buy it back when its price falls towards the industry PE ratio can be profitable. But before making this decision, see if its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on JD. for a while may not be the best time to enter the stock. The price has outpaced its industry peers, which means there are likely to be no more benefits from poor pricing. However, the optimistic outlook is encouraging for JD., which means it is worth digging into other factors in order to take advantage of the next price drop.
If you want to learn more about JD Sports Fashion, you should also consider the risks it currently faces. In terms of investment risks, we have identified 2 warning signs with JD Sports Fashion, and understanding them should be part of your investment process.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.