Matthews International Corporation (NASDAQ:MATW), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$40.76 and falling to the lows of US$34.02. 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 Matthews International's current trading price of US$36.65 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Matthews International’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 Matthews International

What's The Opportunity In Matthews International?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Matthews International’s ratio of 28.68x is trading in-line with its industry peers’ ratio, which means if you buy Matthews International today, you’d be paying a relatively sensible price for it. So, is there another chance to buy low in the future? Given that Matthews International’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Matthews International generate?

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. With profit expected to grow by 83% over the next couple of years, the future seems bright for Matthews International. 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? It seems like the market has already priced in MATW’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at MATW? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on MATW, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for MATW, 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.

So while earnings quality is important, it's equally important to consider the risks facing Matthews International at this point in time. For example, Matthews International has 3 warning signs (and 1 which is significant) we think you should know about.

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

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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.