Premier Foods plc (LON:PFD), which is in the food business, and is based in United Kingdom, saw significant share price movement during recent months on the LSE, rising to highs of £0.39 and falling to the lows of £0.33. 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 Premier Foods's current trading price of £0.36 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 Premier Foods’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Premier Foods?
Good news, investors! Premier Foods is still a bargain right now. My valuation model shows that the intrinsic value for the stock is £0.70, but it is currently trading at UK£0.36 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Premier Foods’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Premier Foods?
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 6.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Premier Foods, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since PFD is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on PFD for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PFD. 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 investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Premier Foods. You can find everything you need to know about Premier Foods in the latest infographic research report. If you are no longer interested in Premier Foods, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.