Should You Investigate Henry Boot PLC (LON:BOOT) At UK£2.35?

Henry Boot PLC (LON:BOOT), which is in the consumer durables business, and is based in United Kingdom, led the LSE gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps sees 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 examine Henry Boot’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Henry Boot

What's the opportunity in Henry Boot?

Henry Boot appears to be overvalued by 29% at the moment, based on my discounted cash flow valuation. The stock is currently priced at UK£2.35 on the market compared to my intrinsic value of £1.82. This means that the opportunity to buy Henry Boot at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Henry Boot’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 does the future of Henry Boot look like?

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. 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. However, with an expected decline of -15% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Henry Boot. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? If you believe BOOT 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. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. 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 BOOT for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Henry Boot. You can find everything you need to know about Henry Boot in the latest infographic research report. If you are no longer interested in Henry Boot, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.