Should You Think About Buying Sleep Country Canada Holdings Inc. (TSE:ZZZ) Now?

While Sleep Country Canada Holdings Inc. (TSE:ZZZ) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the TSX. As a 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 Sleep Country Canada Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Sleep Country Canada Holdings

What is Sleep Country Canada Holdings worth?

According to my valuation model, Sleep Country Canada Holdings seems to be fairly priced at around 19% below my intrinsic value, which means if you buy Sleep Country Canada Holdings today, you’d be paying a reasonable price for it. And if you believe the company’s true value is CA$41.54, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Sleep Country Canada Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Sleep Country Canada Holdings?

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Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 a relatively muted profit growth of 7.3% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Sleep Country Canada Holdings, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in ZZZ’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on ZZZ, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Sleep Country Canada Holdings.

If you are no longer interested in Sleep Country Canada Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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