PolyOne Corporation (POL): Could New Product Launches Boost This Company’s Competitive Edge?

Valuation based on comparables

Under the mutiples-based comparable approach, a company’s value is estimated based on the relative valuation metrics used in the respective industry. This approach is based on the law of one price. It is a better measure as the value is estimated using actual market data. This method provides a market estimate of fair stock price. It allocates more weight to multiples that represent the economic truth regarding the company’s inside story.

Compared against the current market price of each stock, PolyOne Corporation (NYSE:POL) is currently overvalued relative to the market. The current market figures indicate that the company is expected to register negative returns of 17.83% in the future. However, Dow Chemical exhibits a positive potential of 10.16% return as it converges to its intrinsic value.

Future prospects

Using the aforementioned analysis, the stock price of PolyOne Corporation (NYSE:POL) is already higher than its intrinsic value. The company is expecting to capitalize on its recent launches of Next-Generation Wilflex™ Oasis water-based inks to boost customers’ operational efficiency and high performance heat stabilizerfor high consistency silicone applications. In the face of the chemical industry’s future growth prospects, here my opinion would differ from the comparable valuation results as I expect the PolyOne to register further growth in the future as the chemical industry expands and the company reaps the return on its new launches. I would recommend going long on PolyOne.

The article Could New Product Launches Boost This Company’s Competitive Edge? originally appeared on Fool.com and is written by Awais Iqbal.

Awais Iqbal has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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