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Beacon Lighting Group Limited (ASX:BLX), is not the largest company out there, but it led the ASX gainers with a relatively large price hike in the past couple of weeks. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Beacon Lighting Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Beacon Lighting Group
Is Beacon Lighting Group Still Cheap?
Beacon Lighting Group is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison 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 21.63x is currently well-above the industry average of 14.85x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Beacon Lighting Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Beacon Lighting Group generate?
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 profit expected to grow by 31% over the next couple of years, the future seems bright for Beacon Lighting Group. 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 well and truly priced in BLX’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe BLX should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.