Yahoo Finance At UK£0.26, Is TheWorks.co.uk plc (LON:WRKS) Worth Looking At Closely?
TheWorks.co.uk plc (LON:WRKS), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine TheWorks.co.uk’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for TheWorks.co.uk
What's The Opportunity In TheWorks.co.uk?
TheWorks.co.uk appears to be overvalued by 22% at the moment, based on our discounted cash flow valuation. The stock is currently priced at UK£0.26 on the market compared to our intrinsic value of £0.21. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that TheWorks.co.uk’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will TheWorks.co.uk generate?
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. However, with a relatively muted revenue growth of 9.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for TheWorks.co.uk, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in WRKS’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe WRKS 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 tabs on WRKS for some time, 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 positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into TheWorks.co.uk, you'd also look into what risks it is currently facing. For instance, we've identified 2 warning signs for TheWorks.co.uk (1 can't be ignored) you should be familiar with.
If you are no longer interested in TheWorks.co.uk, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
