EITA Resources Berhad (KLSE:EITA), is not the largest company out there, but it had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of RM0.73 to RM0.80. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at EITA Resources Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for EITA Resources Berhad
What's The Opportunity In EITA Resources Berhad?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11% below my intrinsic value, which means if you buy EITA Resources Berhad today, you’d be paying a reasonable price for it. And if you believe the company’s true value is MYR0.84, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, EITA Resources Berhad’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from EITA Resources Berhad?
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. With profit expected to grow by 31% over the next couple of years, the future seems bright for EITA Resources Berhad. 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? EITA’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 track record of its management team. 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 EITA, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.