When Should You Buy ASICS Corporation (TSE:7936)?
ASICS Corporation (TSE:7936) has seen significant share price gains recently, bringing it closer to its yearly peak. However, the stock is currently overvalued by about 26%, trading at JP¥3,503 against an intrinsic value of ¥2,771.64. While profit is expected to grow by 56% in the coming years, potential investors may want to wait for a price drop before buying, as the current price exceeds its fair value. Shareholders might consider selling if they believe the stock will decline towards its intrinsic value.
Let's talk about the popular ASICS Corporation (TSE:7936). The company's shares led the TSE gainers with a relatively large price hike in the past couple of weeks. The recent share price gains has brought the company back closer to its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine ASICS’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
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What Is ASICS Worth?
According to our valuation model, the stock is currently overvalued by about 26%, trading at JP¥3,503 compared to our intrinsic value of ¥2771.64. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that ASICS’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.
See our latest analysis for ASICS
Can we expect growth from ASICS?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 56% over the next couple of years, the future seems bright for ASICS. 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 well and truly priced in 7936’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe 7936 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 7936 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 positive outlook is encouraging for 7936, which means it’s worth diving deeper into other factors 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 1 warning sign for ASICS you should be aware of.
If you are no longer interested in ASICS, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
