Is It Too Late To Consider Buying Richelieu Hardware Ltd. (TSE:RCH)?

While Richelieu Hardware Ltd. (TSE:RCH) might not have the largest market cap around , it saw significant share price movement during recent months on the TSX, rising to highs of CA$47.55 and falling to the lows of CA$41.25. 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 Richelieu Hardware's current trading price of CA$41.25 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 Richelieu Hardware’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Richelieu Hardware

What Is Richelieu Hardware Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 12% below our intrinsic value, which means if you buy Richelieu Hardware today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth CA$47.04, then there’s not much of an upside to gain from mispricing. In addition to this, Richelieu Hardware has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Richelieu Hardware generate?

earnings-and-revenue-growth

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 1.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Richelieu Hardware, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in RCH’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 track record of its management team. 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 RCH, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Richelieu Hardware at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Richelieu Hardware.

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

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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.