Acadian Timber Corp. (TSE:ADN), might not be a large cap stock, but it maintained its current share price over the past couple of month on the TSX, with a relatively tight range of CA$16.83 to CA$18.09. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Acadian Timber’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 Acadian Timber

What Is Acadian Timber Worth?

According to our valuation model, Acadian Timber seems to be fairly priced at around 4.71% above our intrinsic value, which means if you buy Acadian Timber today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth CA$16.33, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Acadian Timber’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Acadian Timber?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Acadian Timber, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? ADN seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ADN for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on ADN should the price fluctuate below its true value.