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Anpario plc (LON:ANP), which is in the food business, and is based in United Kingdom, received a lot of attention from a substantial price movement on the AIM over the last few months, increasing to £4.1 at one point, and dropping to the lows of £3.3. 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 Anpario's current trading price of £3.37 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 Anpario’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Anpario
What's the opportunity in Anpario?
According to my relative valuation model, the stock seems to be currently fairly priced. 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 17.26x is currently trading slightly below its industry peers’ ratio of 18.86x, which means if you buy Anpario today, you’d be paying a fair price for it. And if you believe that Anpario should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like Anpario’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Anpario?
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. With revenues expected to grow by a double-digit 26% over the next couple of years, the outlook is positive for Anpario. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in ANP’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ANP? Will you have enough confidence to invest in the company should the price drop below its fair value?