Yahoo Finance Is It Time To Consider Buying Elementis plc (LON:ELM)?
Elementis plc (LON:ELM), which is in the chemicals business, and is based in United Kingdom, saw significant share price movement during recent months on the LSE, rising to highs of £2.14 and falling to the lows of £1.66. 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 Elementis’s current trading price of £1.79 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 Elementis’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Elementis
Want to help shape the future of investing tools? Participate in a short research study and receive a 6-month subscription to the award winning Simply Wall St research tool (valued at $60)!
Is Elementis still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11.05% above my intrinsic value, which means if you buy Elementis today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth £1.61, there’s only an insignificant downside when the price falls to its real value. Furthermore, Elementis’s low beta implies that the stock is less volatile than the wider market.
What kind of growth will Elementis 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 relatively muted profit growth of 5.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Elementis, at least in the short term.
What this means for you:
Are you a shareholder? ELM’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on ELM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Elementis. You can find everything you need to know about Elementis in the latest infographic research report. If you are no longer interested in Elementis, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
