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Eagle Eye Solutions Group plc (LON:EYE), which is in the it business, and is based in United Kingdom, received a lot of attention from a substantial price increase on the AIM over the last few months. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Eagle Eye Solutions Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Eagle Eye Solutions Group
Is Eagle Eye Solutions Group still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.01% above my intrinsic value, which means if you buy Eagle Eye Solutions Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £2.22, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Eagle Eye Solutions Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Eagle Eye Solutions 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. 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 71% over the next couple of years, the future seems bright for Eagle Eye Solutions 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? EYE’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on EYE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.