Grafton Group plc (LON:GFTU), is not the largest company out there, but it saw a decent share price growth of 13% on the LSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Grafton Group’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Grafton Group

Is Grafton Group Still Cheap?

According to our valuation model, Grafton Group seems to be fairly priced at around 6.7% below our intrinsic value, which means if you buy Grafton Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth ￡11.17, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Grafton Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Grafton Group generate?

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. However, with a relatively muted profit growth of 0.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Grafton Group, at least in the short term.

What This Means For You

Are you a shareholder? GFTU’s 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on GFTU, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.