Time To Buy Sportsman’s Warehouse Holdings Inc (NASDAQ: SPWH)?

in INVESTING IDEAS by

Shares of Sportsman’s Warehouse Holdings Inc (NASDAQ: SPWH) are receiving a lot of investor interest as of late due to the stock’s 37.7% increase over the last month. Shareholders are now asking themselves whether the company’s current stock price is reflective of its true value or if shares have even further upside from here.

Let’s take a look at Sportsman’s Warehouse’s value and outlook based on its most recent financial data to see if there are any catalysts for a price change.


What’s The Opportunity In Sportsman’s Warehouse?

Welcoming news for investors, Sportsman’s Warehouse is still trading at a fairly cheap price. According to our 7 valuation analyses, the intrinsic value for the stock is $7.92 per share and is currently trading at $5.04 in the market. This means that there is still an opportunity to buy now.

Sportsman’s Warehouse Holdings Inc Valuation Detail
Analysis Model Fair Value Upside (Downside)
10-yr DCF Revenue Exit $8.71 73.0%
10-yr DCF EBITDA Exit $8.28 64.5%
5-yr DCF EBITDA Exit $8.77 74.2%
Peer EBITDA Multiples $8.27 64.3%
10-yr DCF Growth Exit $7.04 39.9%
5-yr DCF Growth Exit $7.05 39.9%
Peer P/E Multiples $7.30 45.0%
Average $7.92 57.3%

Click on any of the analyses above to view the latest model with real-time data.

Sportsman’s Warehouse’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 its true value, 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.


Can We Expect Growth From Sportsman’s Warehouse?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matters the most, a more compelling investment thesis would be high growth potential at a cheap price.

Sportsman's Warehouse projected net income chartsource: finbox.io data explorer

With Sportsman’s Warehouse’s relatively muted net profit growth of 6.4% expected over the next five years on average, growth doesn’t seem like a key catalyst for a buying decision, at least in the short to medium-term.


What This Means For Investors

Growth investors typically look to invest in companies that are expanding sales, gaining market share and building customer bases. On the other hand, value investors often argue that the most successful investments are in companies that deliver the highest cash flows while trading at the lowest valuation.

But why not put those hands together? A company that has both growth and value characteristics would certainly make the most attractive investment. So what did we find out about Sportsman’s Warehouse?

Although Sportsman’s Warehouse’s future growth is relatively low, the company’s stock still appears to be trading at a discount to its intrinsic value. Therefore, it may be a great time to purchase shares or add more to your existing holdings.

It is important to note that there are a variety of other fundamental factors that I have not taken into consideration in this article. If you have not done so already, I highly recommend that you complete your research on Sportsman’s Warehouse by taking a look at the following:

Valuation Metrics: how much upside do shares of Sportsman’s Warehouse have based on Wall Street’s consensus price target? Take a look at our analyst upside data explorer that compares the company’s upside relative to its peers.

Risk Metrics: how is Sportsman’s Warehouse’s financial health? Find out by viewing our financial leverage data metric which plots the dollars in total assets for each dollar of common equity over time.

Efficiency Metrics: is management becoming more or less efficient over time? Find out by analyzing the company’s asset turnover ratio which measures the dollars in revenue a company generates per dollar of assets.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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