Is it time to consider purchasing Casella Waste Systems, Inc. (NASDAQ: CWST)?
While Casella Waste Systems, Inc. (NASDAQ: CWST) may not be the most well-known stock right now, it saw a double-digit rise in the share price of over 10%. in the past two months on the NASDAQGS. As a mid-cap stock with high analyst coverage, you can assume that any recent change in the outlook for the company is already built into the stock price. However, what if the stock is still a good deal? Today I will analyze the most recent outlook and valuation data from Casella Waste Systems to see if the opportunity still exists.
Check out our latest review for Casella Waste Systems
What is Casella Waste Systems worth?
According to my multiple price model, where I compare the company’s price / earnings ratio to the industry average, the stock currently looks expensive. I used the price / earnings ratio in this case because there is not enough visibility to forecast its cash flow. The stock’s ratio of 39.33x is currently well above the industry average of 28.89x, meaning it is trading at a higher price relative to its peers. Another thing to keep in mind is that the Casella Waste Systems share price is quite stable relative to the rest of the market as indicated by its low beta. This means that if you think the current stock price is likely to move towards the levels of its industry peers over time, a low beta could suggest that it is not likely to reach that level anytime soon. and once there, it can be difficult for him to fall back into an attractive buying range.
Can we expect growth from Casella Waste Systems?
Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking to grow your portfolio. While value investors argue that intrinsic value versus price matters most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in earnings expected over the next two years, near-term growth is certainly not a driver of a buying decision. It appears that great uncertainty is on the cards for Casella Waste Systems, at least in the near future.
What this means for you:
Are you a shareholder? If you think the CWST should trade below its current price, selling high and buying it back when its price drops to the industry PE ratio can be profitable. Given the uncertainty of negative growth going forward, this might be a good time to reduce your portfolio risk. But before you make that decision, check to see if its fundamentals have changed.
Are you a potential investor? If you’ve been keeping your eye on CWST for a while, it might not be the best time to get into the stock. Its price has exceeded that of its peers in the industry, in addition to negative future prospects. However, there are also other important factors that we have not taken into account today, such as the history of its management. If the price drops in the future, will you be informed enough to buy?
With that in mind, we wouldn’t consider investing in a stock unless we have a thorough understanding of the risks. To this end, you should inquire about the 4 warning signs we spotted with Casella Waste Systems (including 1 that cannot be ignored).
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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