Yahoo Finance Is Pennant International Group plc (LON:PEN) Potentially Undervalued?
Pennant International Group plc (LON:PEN), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the AIM over the last few months, increasing to UK£0.45 at one point, and dropping to the lows of UK£0.28. 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 Pennant International Group's current trading price of UK£0.28 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 Pennant International 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 Pennant International Group
What is Pennant International Group worth?
Pennant International Group appears to be overvalued by 36% at the moment, based on my discounted cash flow valuation. The stock is currently priced at UK£0.28 on the market compared to my intrinsic value of £0.20. This means that the opportunity to buy Pennant International Group at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Pennant International Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Pennant International Group?
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. With revenues expected to grow by a double-digit 20% over the next couple of years, the outlook is positive for Pennant International Group. If the level of expenses is able to be maintained, 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? It seems like the market has well and truly priced in PEN’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe PEN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on PEN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for PEN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. When we did our research, we found 3 warning signs for Pennant International Group (1 is significant!) that we believe deserve your full attention.
If you are no longer interested in Pennant International Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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.
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