Yahoo Finance At CA$50.00, Is It Time To Put Badger Infrastructure Solutions Ltd. (TSE:BDGI) On Your Watch List?
Badger Infrastructure Solutions Ltd. (TSE:BDGI), might not be a large cap stock, but it led the TSX gainers with a relatively large price hike in the past couple of weeks. The recent jump in the share price has meant that the company is trading at close to its 52-week high. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Badger Infrastructure Solutions’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Badger Infrastructure Solutions
Is Badger Infrastructure Solutions Still Cheap?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 30.32x is currently trading slightly below its industry peers’ ratio of 32.15x, which means if you buy Badger Infrastructure Solutions today, you’d be paying a decent price for it. And if you believe Badger Infrastructure Solutions should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Badger Infrastructure Solutions’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Badger Infrastructure Solutions?
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 more than double over the next couple of years, the future seems bright for Badger Infrastructure Solutions. 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? BDGI’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at BDGI? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on BDGI, 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 BDGI, 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 Badger Infrastructure Solutions at this point in time. Every company has risks, and we've spotted 1 warning sign for Badger Infrastructure Solutions you should know about.
If you are no longer interested in Badger Infrastructure Solutions, 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.
