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Is Franklin Electric Co., Inc. (NASDAQ:FELE) Potentially Undervalued?

editorial-team@simplywallst.com (Simply Wall St)
·3-min read

Franklin Electric Co., Inc. (NASDAQ:FELE), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$107 at one point, and dropping to the lows of US$93.97. 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 Franklin Electric's current trading price of US$93.97 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 Franklin Electric’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 Franklin Electric

What's The Opportunity In Franklin Electric?

Great news for investors – Franklin Electric is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $121.36, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Franklin Electric’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Franklin Electric?

earnings-and-revenue-growth
earnings-and-revenue-growth

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 Franklin Electric, it is expected to deliver a relatively unexciting earnings growth of 8.3%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Franklin Electric, at least in the near term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since FELE is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

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Are you a potential investor? If you’ve been keeping an eye on FELE for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FELE. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 1 warning sign for Franklin Electric you should know about.

If you are no longer interested in Franklin Electric, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com