Yahoo Finance Should You Investigate Tricorn Group plc (LON:TCN) At UK£0.075?
Tricorn Group plc (LON:TCN), which is in the machinery business, and is based in United Kingdom, received a lot of attention from a substantial price movement on the AIM over the last few months, increasing to UK£0.12 at one point, and dropping to the lows of UK£0.075. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Tricorn Group's current trading price of UK£0.075 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tricorn Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Tricorn Group
Is Tricorn Group still cheap?
Good news, investors! Tricorn Group is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Tricorn Group’s ratio of 4.13x is below its peer average of 13.88x, which indicates the stock is trading at a lower price compared to the Machinery industry. Another thing to keep in mind is that Tricorn Group’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will Tricorn Group 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. 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. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Tricorn Group. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although TCN is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to TCN, 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 TCN for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Tricorn Group. You can find everything you need to know about Tricorn Group in the latest infographic research report. If you are no longer interested in Tricorn Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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