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4imprint Group plc (LON:FOUR), might not be a large cap stock, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£55.50 and falling to the lows of UK£47.00. 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 4imprint Group's current trading price of UK£48.15 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 4imprint Group’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 4imprint Group
What's The Opportunity In 4imprint Group?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 14.85x is currently trading slightly above its industry peers’ ratio of 14.14x, which means if you buy 4imprint Group today, you’d be paying a relatively sensible price for it. And if you believe 4imprint Group should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like 4imprint Group’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
What does the future of 4imprint Group look like?
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. 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 profit growth of 9.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for 4imprint Group, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in FOUR’s growth outlook, with shares trading around industry price multiples. 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 FOUR? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?