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Is It Time To Consider Buying Inchcape plc (LON:INCH)?

Inchcape plc (LON:INCH), which is in the retail distributors business, and is based in United Kingdom, received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to £6.32 at one point, and dropping to the lows of £5.54. 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 Inchcape's current trading price of £5.54 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Inchcape’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 Inchcape

What's the opportunity in Inchcape?

Good news, investors! Inchcape is still a bargain right now. According to my valuation, the intrinsic value for the stock is £7.77, but it is currently trading at UK£5.54 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Inchcape’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Inchcape?

LSE:INCH Past and Future Earnings, August 15th 2019
LSE:INCH Past and Future Earnings, August 15th 2019

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. Inchcape’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since INCH is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

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Are you a potential investor? If you’ve been keeping an eye on INCH for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy INCH. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Inchcape. You can find everything you need to know about Inchcape in the latest infographic research report. If you are no longer interested in Inchcape, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.