Yahoo Finance Is Plus500 Ltd (AIM:PLUS) Undervalued?
Plus500 Ltd (AIM:PLUS), a diversified financials company based in Israel, received a lot of attention from a substantial price increase on the AIM in the over the last few months. Less covered, small-stocks like PLUS sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could PLUS still be trading at a low price relative to its actual value? Let’s take a look at PLUS’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for Plus500
What is PLUS worth?
According to my valuation model, the stock is currently overvalued by about 28%, trading at £8.53 compared to my intrinsic value of £6.65. This means that the buying opportunity has probably disappeared for now. Furthermore, PLUS’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What kind of growth will PLUS 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 -4.50% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for PLUS. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? If you believe PLUS is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 PLUS for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Plus500. You can find everything you need to know about PLUS in the latest infographic research report. If you are no longer interested in Plus500, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.
