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While Aptitude Software Group plc (LON:APTD) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the LSE, rising to highs of UK£4.80 and falling to the lows of UK£4.14. 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 Aptitude Software Group's current trading price of UK£4.55 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 Aptitude Software 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 Aptitude Software Group
What is Aptitude Software Group worth?
Great news for investors – Aptitude Software Group is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 41.45x is currently well-below the industry average of 46.8x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Aptitude Software Group’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Aptitude Software Group look like?
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. Though in the case of Aptitude Software Group, it is expected to deliver a relatively unexciting earnings growth of 0.4%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since APTD is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.