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At US$10.44, Is It Time To Put Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) On Your Watch List?

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Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$12.09 at one point, and dropping to the lows of US$9.95. 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 Natural Grocers by Vitamin Cottage's current trading price of US$10.44 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 Natural Grocers by Vitamin Cottage’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 Natural Grocers by Vitamin Cottage

What is Natural Grocers by Vitamin Cottage worth?

Great news for investors – Natural Grocers by Vitamin Cottage is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 13.81x is currently well-below the industry average of 20.47x, meaning that it is trading at a cheaper price relative to its peers. However, given that Natural Grocers by Vitamin Cottage’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 Natural Grocers by Vitamin Cottage generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. 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 2.7% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for Natural Grocers by Vitamin Cottage.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since NGVC is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

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

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Natural Grocers by Vitamin Cottage has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Natural Grocers by Vitamin Cottage, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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