At GBP 1.25, is it time to add JD Sports Fashion Plc (LON:JD.) to your watchlist?

While not the biggest company on the market, JD Sports Fashion Plc (LON:JD.) has seen a decent 13% share price increase on the LSE in recent months. While this is good news for shareholders, the company has traded significantly higher over the past year. With many analysts covering the mid-cap stock, we can assume that any price-relevant announcements have already been factored into the share price. But what if there is still a buying opportunity? Today we will analyze the latest data on JD Sports Fashion’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for JD Sports Fashion

What opportunities does JD Sports Fashion offer?

Good news, investors! JD Sports Fashion is currently still a bargain according to our price multiple model, which compares the company’s price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this case because there isn’t enough transparency to predict cash flows. The stock’s ratio of 12.07x is currently well below the industry average of 16.32x, meaning it’s trading at a cheaper price compared to its peers. However, since JD Sports Fashion’s stock is quite volatile (i.e. its price movements are stronger compared to the rest of the market), this could mean that the price can fall even further, giving us another buying opportunity in the future. This is based on its high beta, which is a good indicator of share price volatility.

Can we expect growth from JD Sports Fashion?

Future prospects are an important consideration when looking to buy a stock, especially if you’re an investor looking for growth in their portfolio. Although value investors would argue that intrinsic value relative to price is most important, high growth potential at a cheap price would be a more compelling investment thesis. With earnings expected to grow 51% over the next few years, the future looks bright for JD Sports Fashion. It looks like higher cash flow is on the horizon for the stock, which should lead to a higher share valuation.

What this means for you

Are you a shareholder? With JD. currently trading below the industry P/E, it could be a good time to increase your stock holdings. With the optimistic outlook on the horizon, this growth doesn’t seem to be fully reflected in the share price yet. However, there are other factors to consider, such as financial health, that could explain the current price multiple.

Are you a potential investor? If you have been keeping an eye on JD. for some time, now could be the right time to get into the stock. The strong future earnings prospects are not yet fully reflected in the current share price, which means it is not too late to buy JD. However, before making an investment decision, you should consider other factors such as the strength of the balance sheet to make an informed investment decision.

Since timing is very important when selecting individual stocks, it is worth taking a look at the latest analyst forecasts, so feel free to check out our free analyst forecast chart.

If you are no longer interested in JD Sports Fashion, you can view our list of over 50 other stocks with high growth potential on our free platform.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.