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Companies that trade at market prices below their actual values, such as SThree and BGEO Group, are perceived to be undervalued. There’s a few ways you can value a company. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
SThree plc (LSE:STHR)
SThree plc provides recruitment services for science, technology, engineering, and mathematics industries primarily in the United Kingdom and Ireland, Continental Europe, the United States, and the Asia Pacific and the Middle East. Started in 1986, and run by CEO Gary Elden, the company currently employs 2,866 people and with the market cap of GBP £429.72M, it falls under the small-cap group.
STHR’s stock is now hovering at around -37% under its intrinsic level of £5.17, at the market price of UK£3.23, based on my discounted cash flow model. This mismatch indicates a chance to invest in STHR at a discounted price. What’s even more appeal is that STHR’s PE ratio stands at 15.03x against its its Professional Services peer level of, 17.1x meaning that relative to its competitors, we can buy STHR’s stock at a cheaper price today. STHR is also in great financial shape, as current assets can cover liabilities in the near term and over the long run.
More on SThree here.
BGEO Group plc (LSE:BGEO)
BGEO Group plc, together with its subsidiaries, provides banking, healthcare, insurance, real estate, utility, pharmaceutical, leasing, brokerage, and investment management services to corporate and individual customers primarily in Georgia. Started in 1994, and currently headed by CEO Irakli Gilauri, the company provides employment to 25,795 people and with the market cap of GBP £1.35B, it falls under the small-cap category.
BGEO’s shares are currently floating at around -47% below its actual value of GEL67.17, at a price of UK£35.56, according to my discounted cash flow model. This mismatch indicates a chance to invest in BGEO at a discounted price. Moreover, BGEO’s PE ratio is around 12.09x against its its Banks peer level of, 16.8x suggesting that relative to its peers, you can buy BGEO for a cheaper price. BGEO is also in great financial shape, with current assets covering liabilities in the near term and over the long run.
Dig deeper into BGEO Group here.