Should You Think About Buying Standard Motor Products, Inc. (NYSE:SMP) Now?

Standard Motor Products, Inc. (NYSE:SMP), which is in the auto components business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Standard Motor Products’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Standard Motor Products

Is Standard Motor Products still cheap?

According to my valuation model, Standard Motor Products seems to be fairly priced at around 14% below my intrinsic value, which means if you buy Standard Motor Products today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $47.74, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Standard Motor Products’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Standard Motor Products 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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 22% over the next couple of years, the future seems bright for Standard Motor Products. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? SMP’s optimistic 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on SMP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Standard Motor Products. You can find everything you need to know about Standard Motor Products in the latest infographic research report. If you are no longer interested in Standard Motor Products, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.