While Columbia Sportswear Company (NASDAQ: COLM) may not be the most well-known stock right now, it has received a lot of attention due to a substantial price movement on the NASDAQGS in recent months, rising to US $ 104 at one point and falling to a low of US $ 93.74. Certain movements in stock prices can give investors a better opportunity to get into the stock, and potentially buy at a lower price. One question to be answered is whether Columbia Sportswear’s current price of US $ 96.22 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 the outlook and value of Columbia Sportswear based on the most recent financial data to see if there are any catalysts for a price change.
What are the opportunities at Columbia Sportswear?
Columbia Sportswear is currently expensive based on my multiple price model, where I look at the company’s price / earnings ratio relative to the industry average. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find Columbia Sportswear’s 24.88x ratio to be above its peer average of 19.71x, suggesting that the stock is trading at a higher price than the luxury industry. Another thing to keep in mind is that the Columbia Sportswear share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you think the current stock price is likely to move towards the levels of its industry peers over time, a low beta could suggest that it is not likely to reach that level anytime soon, and once there, it can be difficult for him to fall back into an attractive buying range.
What does the future of Columbia Sportswear look like?
Investors looking to grow their portfolio may want to consider the prospects of a company before buying its shares. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s take a look at the future expectations of the business as well. Columbia Sportswear’s profits over the next several years are expected to increase by 83%, indicating a very optimistic future. This should lead to more robust cash flow, fueling a higher value of the stock.
What this means for you:
Are you a shareholder? It appears that the market has indeed taken into account the positive outlook for COLM, with stocks trading above industry price multiples. At this current price, shareholders may ask a different question: should I sell? If you think COLM should trade below its current price, selling high and buying it back when its price drops towards the industry PE ratio can be profitable. But before you make that decision, check to see if its fundamentals have changed.
Are you a potential investor? If you’ve been keeping your eye on COLM for a while, it might not be the best time to enter stock. The price has topped its industry peers, which means there is likely to be no more benefit from poor pricing. However, the bullish outlook is encouraging for COLM, which means it is worth exploring other factors in order to take advantage of the next price drop.
In light of this, if you want to do more analysis on the business, it is essential to be aware of the risks involved. You would be interested to know that we have found 1 warning sign for Columbia Sportswear and you’ll want to know about it.
If you are no longer interested in Columbia Sportswear, you can use our free platform to view our list of over 50 other stocks with strong growth potential.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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