Is it too late to consider buying LKQ Corporation (NASDAQ:LKQ)?

Today we’re going to take a look at the well-established LKQ Corporation (NASDAQ: LKQ). The company’s shares have received a lot of attention due to significant price movement on the NASDAQGS over the past few months, rising as high as US$53.41 at one point, and falling to the low of 40 $.29 USD. Certain stock price movements can give investors a better opportunity to enter the stock and potentially buy at a lower price. It is worth asking whether LKQ’s current price of US$41.97 reflects the true value of the large-cap company? Or is it currently undervalued, giving us an opportunity to buy? Let’s take a look at LKQ’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for LKQ

Is LKQ still cheap?

The stock price looks reasonable at the moment according to our price multiple model, in which we compare the company’s price-to-earnings ratio to the industry average. In this case, we used the price-to-earnings (PE) ratio because there is not enough information to reliably forecast the stock’s cash flows. We see that LKQ’s ratio of 13.49x is trading slightly below its industry peers’ ratio of 13.49x, which means if you buy LKQ today, you’ll be paying a decent price for it. And if you think LKQ should trade at this level in the long term, then there’s not much upside to be gained over other industry peers. However, there could be a buying opportunity in the future. This is because LKQ’s beta (a measure of stock price volatility) is high, meaning that 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 a great buying opportunity.

What does the future look like for LKQ?

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Buying a great company with a strong outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. LKQ’s profits over the next few years are expected to increase by 41%, which suggests a very optimistic future. This should lead to more robust cash flows, translating into a higher stock market value.

What this means for you

Are you a shareholder? It appears the market has already priced in LKQ’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors that we haven’t considered today, such as the financial strength of the company. Have these factors changed since you last looked at LKQ? Will you have enough confidence to invest in the company if the price falls below the industry PE ratio?

Are you a potential investor? If you’re monitoring LKQ, now may not be the most advantageous time to buy, given that it’s trading around industry price multiples. However, the positive outlook is encouraging for LKQ, meaning it is worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you want to dig deeper into this stock, it’s crucial to consider the risks it faces. For example, we discovered 3 warning signs which you should take a look at to get a better picture of LKQ.

If you are no longer interested in LKQ, you can use our free platform to view our list of over 50 other stocks with high 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 constitute financial advice. It is not a recommendation to buy or sell any stock, 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. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any stocks mentioned.

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