What Does Tennant Company’s (NYSE:TNC) Share Price Indicate?

Tennant Company (NYSE:TNC), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today we will analyze the most recent data on Tennant’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Tennant

What Is Tennant Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 8.00% above our intrinsic value, which means if you buy Tennant today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $99.05, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Tennant’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Tennant 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. However, with a negative profit growth of -14% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Tennant. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? TNC seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on TNC for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on TNC should the price fluctuate below its true value.

If you want to dive deeper into Tennant, you’d also look into what risks it is currently facing. For example, Tennant has 3 warning signs (and 1 which can’t be ignored) we think you should know about.

If you are no longer interested in Tennant, 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.