nVent Electric plc (NYSE:NVT) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$83.28 at one point, and dropping to the lows of US$60.72. 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 nVent Electric's current trading price of US$63.36 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at nVent Electric's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In nVent Electric?
Good news, investors! nVent Electric is still a bargain right now. According to our valuation, the intrinsic value for the stock is $95.22, but it is currently trading at US$63.36 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because nVent Electric's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will nVent Electric generate?
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. Though in the case of nVent Electric, it is expected to deliver a negative earnings growth of -6.8%, 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? Although NVT is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to NVT, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you've been keeping an eye on NVT for a while, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 3 warning signs for nVent Electric (1 shouldn't be ignored!) that we believe deserve your full attention.
If you are no longer interested in nVent Electric, 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.
