Yahoo Finance What’s Ahead For The Alumasc Group plc (LON:ALU)?
The Alumasc Group plc (LON:ALU), a UK£49.7m small-cap, operates in the building product industry, which is predominantly affected by shifts in the housing market, as a result of demand from construction projects. Capital goods analysts are forecasting for the entire industry, a positive double-digit growth of 23.3% in the upcoming year , and a massive growth of 47.5% over the next couple of years. the growth rate of the UK stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Alumasc Group is lagging or leading in the industry.
View our latest analysis for Alumasc Group
What’s the catalyst for Alumasc Group’s sector growth?
Companies appear highly competitive with each other and consolidation seems to be a common theme. In the previous year, the industry endured negative growth of -3.1%, underperforming the UK market growth of 15.2%. Alumasc Group lags the pack with its negative growth rate of -34.0% over the past year, which indicates the company has been growing at a slower pace than its building products peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 30.9% in the upcoming year. This future growth may make Alumasc Group a more expensive stock relative to its peers.
Is Alumasc Group and the sector relatively cheap?
The building products sector’s PE is currently hovering around 12.71x, in-line with the UK stock market PE of 17.03x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 14.5% compared to the market’s 12.4%, potentially illustrative of past tailwinds. On the stock-level, Alumasc Group is trading at a PE ratio of 11.99x, which is relatively in-line with the average building products stock. In terms of returns, Alumasc Group generated 17.7% in the past year, which is 3.1% over the building products sector.
Next Steps:
Alumasc Group’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Alumasc Group has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Alumasc Group’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has ALU’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Alumasc Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
