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Why Somero Enterprises, Inc. (LON:SOM) Could Be Worth Watching

Simply Wall St
·3-min read

Somero Enterprises, Inc. (LON:SOM), is not the largest company out there, but it received a lot of attention from a substantial price increase on the AIM over the last few months. 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 Somero Enterprises’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Somero Enterprises

What is Somero Enterprises worth?

Good news, investors! Somero Enterprises is still a bargain right now. According to my valuation, the intrinsic value for the stock is £4.91, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that Somero Enterprises’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Somero Enterprises?

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

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 1.3% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for Somero Enterprises.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since SOM 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 SOM 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 SOM. 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.

If you'd like to know more about Somero Enterprises as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Somero Enterprises and we think they deserve your attention.

If you are no longer interested in Somero Enterprises, 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. 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.