Yahoo Finance Should You Buy Dorman Products Inc (NASDAQ:DORM) At US$79.20?
Dorman Products Inc (NASDAQ:DORM), a auto components company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NasdaqGS. As a mid-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 take a look at Dorman Products’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Dorman Products
What’s the opportunity in Dorman Products?
Dorman Products appears to be overvalued by 25.87% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$79.20 on the market compared to my intrinsic value of $62.92. This means that the opportunity to buy Dorman Products at a good price has disappeared! Furthermore, Dorman Products’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What does the future of Dorman Products 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. In the upcoming year, Dorman Products’s earnings are expected to increase by 25.4%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in DORM’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe DORM 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 DORM 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 DORM, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Dorman Products. You can find everything you need to know about Dorman Products in the latest infographic research report. If you are no longer interested in Dorman Products, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
