Yahoo Finance At UK£1.80, Is Gresham Technologies plc (LON:GHT) Worth Looking At Closely?
Gresham Technologies plc (LON:GHT), is not the largest company out there, but it led the LSE gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Gresham Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Gresham Technologies
Is Gresham Technologies Still Cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 18% below my intrinsic value, which means if you buy Gresham Technologies today, you’d be paying a fair price for it. And if you believe that the stock is really worth £2.19, then there’s not much of an upside to gain from mispricing. Furthermore, Gresham Technologies’s low beta implies that the stock is less volatile than the wider market.
What kind of growth will Gresham Technologies generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 revenue growth of 9.2% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for Gresham Technologies.
What This Means For You
Are you a shareholder? GHT’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 an eye on GHT, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Gresham Technologies at this point in time. For example - Gresham Technologies has 1 warning sign we think you should be aware of.
If you are no longer interested in Gresham Technologies, 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.
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