Quad/Graphics, Inc. (NYSE:QUAD), might not be a large cap stock, but it saw a significant share price rise of 73% 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. Less-covered, small caps tend to present 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 take a look at Quad/Graphics’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Quad/Graphics

What Is Quad/Graphics Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 12.02% above our intrinsic value, which means if you buy Quad/Graphics today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $6.61, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Quad/Graphics’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 Quad/Graphics 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 an expected decline of -7.9% in revenues over the next year, short term growth isn’t a driver for a buy decision for Quad/Graphics. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, QUAD appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 QUAD for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears 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 gel your views on QUAD should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Quad/Graphics at this point in time. In terms of investment risks, we've identified 1 warning sign with Quad/Graphics, and understanding it should be part of your investment process.

If you are no longer interested in Quad/Graphics, 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.