Advertisement
Canada markets closed

  • S&P/TSX

    21,873.72
    -138.00 (-0.63%)
     

  • S&P 500

    5,071.63
    +1.08 (+0.02%)
     

  • DOW

    38,460.92
    -42.77 (-0.11%)
     

  • CAD/USD

    0.7302
    +0.0004 (+0.05%)
     

  • CRUDE OIL

    82.66
    -0.15 (-0.18%)
     

  • Bitcoin CAD

    87,929.54
    -3,443.10 (-3.77%)
     

  • CMC Crypto 200

    1,387.48
    -36.62 (-2.57%)
     

  • GOLD FUTURES

    2,332.20
    -6.20 (-0.27%)
     

  • RUSSELL 2000

    1,995.43
    -7.22 (-0.36%)
     

  • 10-Yr Bond

    4.6520
    +0.0540 (+1.17%)
     

  • NASDAQ futures

    17,470.00
    -194.50 (-1.10%)
     

  • VOLATILITY

    15.97
    +0.28 (+1.78%)
     

  • FTSE

    8,040.38
    -4.43 (-0.06%)
     

  • NIKKEI 225

    37,762.78
    -697.30 (-1.81%)
     

  • CAD/EUR

    0.6817
    -0.0002 (-0.03%)
     

Is It Time To Consider Buying Acadian Timber Corp. (TSE:ADN)?

Simply Wall St
·3 min read

Acadian Timber Corp. (TSE:ADN), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$16.29 and falling to the lows of CA$14.60. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Acadian Timber's current trading price of CA$15.68 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Acadian Timber’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Acadian Timber

Is Acadian Timber Still Cheap?

Acadian Timber appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Acadian Timber’s ratio of 13.21x is above its peer average of 4.65x, which suggests the stock is trading at a higher price compared to the Forestry industry. Furthermore, Acadian Timber’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 levels around its industry peers, 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 Acadian Timber look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. Though in the case of Acadian Timber, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? If you believe ADN is currently trading above its peers, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.

ADVERTISEMENT

Are you a potential investor? If you’ve been keeping an eye on ADN for a while, now may not be the best time to enter into the stock. Its price has risen beyond its industry peers, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

If you want to dive deeper into Acadian Timber, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Acadian Timber and we think they deserve your attention.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here