While MasterCraft Boat Holdings, Inc. (NASDAQ: MCFT) may not be the best-known stock right now, it has seen some major price moves over the past few months on the NASDAQGM, reaching highs of US$29.35 and falling to lows of US$22.49. Certain movements in the stock price can give investors a better opportunity to get into the stock and potentially buy at a lower price. A question that needs to be answered is whether MasterCraft Boat Holdings’ current trading price of US$24.70 reflects the true value of the small cap? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at the outlook and value of MasterCraft Boat Holdings based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for MasterCraft Boat Holdings

What is MasterCraft Boat Holdings worth?

According to my multiple price model, which compares the company’s price-earnings ratio to the industry average, the stock price seems justified. In this case, I used the Price/Earnings (PE) ratio since there is not enough information to reliably predict the stock’s cash flow. I find that MasterCraft Boat Holdings’ ratio of 7.63x trades slightly below its industry peers’ ratio of 10.89x, which means that if you buy MasterCraft Boat Holdings today, you will pay one reasonable price. And if you think MasterCraft Boat Holdings should be trading at this level for the long term, then there’s not much upside to gain over other industry peers. Although there may be an opportunity to buy in the future. This is because MasterCraft Boat Holdings’ beta (a measure of stock price volatility) is high, which means that its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s stock will likely fall more than the rest of the market, providing an excellent buying opportunity.

Can we expect growth from MasterCraft Boat Holdings?

The story continues

Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to rise 36% over the next year, the near-term future looks bright for MasterCraft Boat Holdings. It seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.

What does this mean to you :

Are you a shareholder? It looks like the market has already priced in the positive outlook for MCFT, with stocks trading around price multiples of the sector. However, there are also other important factors that we haven’t considered today, such as the background of its management team. Have these factors changed since the last time you consulted MCFT? Will you have enough conviction to buy if the price moves below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on MCFT, now might not be the most optimal time to buy, given that it’s trading around industry price multiples. However, the positive outlook is encouraging for MCFT, which means it is worth looking further into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you want to do more analysis on the company, it is essential to be aware of the risks involved. During our analysis, we found that MasterCraft Boat Holdings has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in MasterCraft Boat Holdings, you can use our free platform to see our list of more 50 other stocks with strong growth potential.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.