Home Fashion Brands When Should You Buy Sally Beauty Holdings, Inc. (NYSE:SBH)?

When Should You Buy Sally Beauty Holdings, Inc. (NYSE:SBH)?

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Sally Beauty Holdings, Inc., NYSE:SBH, is not the largest company, but it has received a lot attention from a significant price move on the NYSE over recent months, rising to US$20.92 and then dropping to US$15.93. Investors may have a greater chance to buy the stock at a lower price if share prices move in certain ways. It is important to determine if the current Sally Beauty Holdings trading price of US$15.93 reflects the actual value of this small-cap. Is it undervalued and allowing us to buy? Let’s take a look at Sally Beauty Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Our latest analysis of Sally Beauty Holdings is available.

What’s the chance in Sally Beauty Holdings

According to my price multiple analysis, where I compare the company’s price-to earnings ratio to the industry average, the share price seems to be reasonable at the moment. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.94x is currently trading slightly below its industry peers’ ratio of 8.26x, which means if you buy Sally Beauty Holdings today, you’d be paying a decent price for it. And if you believe Sally Beauty Holdings should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. However, there may be an option to buy in future. This is because Sally Beauty Holdings’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.

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Are we able to expect growth from Sally Beauty Holdings

NYSE:SBH Earnings & Revenue Growth March 8th 2022

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. 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. Sally Beauty Holdings’ earnings growth is expected to be in teens in the coming years, which indicates a solid future. This should result in strong cash flows that will feed into a higher share price.

What does this mean for you?

Are you a shareholder? SBH’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. These factors have changed since you last looked at SBH. If the price falls below the industry average PE ratio, will you still be able to invest in the company?

Are you a potential investor? If you’ve been keeping an eye on SBH, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for SBH, which 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.

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You can also explore the risks facing Sally Beauty Holdings if you wish to delve deeper into it. Sally Beauty Holdings is an example. 3 warning signsWe think you should be aware.

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You can view our list of over 50 stocks with high growth potential if you’re not interested in Sally Beauty Holdings.

This article is by Simply Wall St. It is general in nature. Our commentary is based on historical data and analyst projections. We do not intend to provide financial advice.It does not make a recommendation to buy, sell, or trade any stock. It also does not take into account your financial goals or financial situation. We strive to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not include the most recent announcements from price-sensitive companies or qualitative material. Simply Wall St holds no position in any stocks.

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