Is it too late to consider buying Simpson Manufacturing Co., Inc. (NYSE: SSD)?

Simpson Manufacturing Co., Inc. (NYSE: SSD), may not be a large-cap stock, but it has seen decent stock price growth in the teens on the NYSE over the past few month. Since many analysts cover mid-cap stocks, we would expect any price-sensitive announcements to have already been factored into the stock price. But what if there is still a buying opportunity? Let’s take a look at Simpson Manufacturing’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Simpson Manufacturing

Is Simpson Manufacturing still cheap?

According to my price multiple model, which compares the company’s price-to-earnings ratio to the industry average, the stock price appears justified. I used the price-to-earnings ratio in this case because there is not enough visibility to forecast its cash flows. The stock’s ratio of 18.88x is currently trading slightly above its industry peers’ ratio of 17.25x, meaning if you buy Simpson Manufacturing today, you’ll be paying a relatively reasonable price. And if you think Simpson Manufacturing should trade at this level over the long term, then there should only be a fairly minimal downside relative to other industry peers. Is there another opportunity to buy low in the future? Since Simpson Manufacturing’s stock price is quite volatile, we could potentially see it fall (or rise) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator of how the stock is doing relative to the rest of the market.

What does the future look like for Simpson Manufacturing?

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Although value investors argue that it’s the intrinsic value relative to the price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. However, with relatively moderate earnings growth of 4.7% expected for next year, growth does not appear to be a key factor for a decision to buy Simpson Manufacturing, at least in the short term.

What this means for you

Are you a shareholder? It appears the market has already priced in SSD’s growth prospects, 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 reviewed SSD? Will you have enough conviction to buy if the price fluctuates below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on SSDs, now may not be the most advantageous time to buy, given that they’re trading around industry price multiples. However, the positive growth outlook could imply that it is worth digging deeper into other factors in order to take advantage of the next price drop.

If you want to dig deeper into Simpson Manufacturing, you’ll also look at the risks it currently faces. For example: Simpson Manufacturing has 1 warning sign we think you should be aware of this.

If you are no longer interested in Simpson Manufacturing, 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 does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.