Yahoo Finance Should You Investigate Dunelm Group plc (LON:DNLM) At UK£9.35?
Dunelm Group plc (LON:DNLM), might not be a large cap stock, but it led the LSE gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Dunelm Group’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Dunelm Group
What's The Opportunity In Dunelm Group?
Good news, investors! Dunelm Group is still a bargain right now. According to my valuation, the intrinsic value for the stock is £12.87, but it is currently trading at UK£9.35 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Dunelm Group’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.
Can we expect growth from Dunelm Group?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 a negative profit growth of -8.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Dunelm Group. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although DNLM is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to DNLM, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on DNLM for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you want to dive deeper into Dunelm Group, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with Dunelm Group (including 1 which is concerning).
If you are no longer interested in Dunelm Group, 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
