Is John Wiley & Sons, Inc. (NYSE:JW.A) Potentially Undervalued?
John Wiley & Sons, Inc. (NYSE:JW.A), which is in the media business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of US$49.55 and falling to the lows of US$41.51. 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 John Wiley & Sons's current trading price of US$41.51 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at John Wiley & Sons’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for John Wiley & Sons
What is John Wiley & Sons worth?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that John Wiley & Sons’s ratio of 16.07x is trading slightly above its industry peers’ ratio of 14.19x, which means if you buy John Wiley & Sons today, you’d be paying a relatively reasonable price for it. And if you believe John Wiley & Sons should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since John Wiley & Sons’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of John Wiley & Sons look like?
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 matter the most, a more compelling investment thesis would be high growth potential at a cheap price. John Wiley & Sons’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? JW.A’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at JW.A? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping tabs on JW.A, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for JW.A, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on John Wiley & Sons. You can find everything you need to know about John Wiley & Sons in the latest infographic research report. If you are no longer interested in John Wiley & Sons, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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