Endomines AB (publ) (OM:ENDO), a metals and mining company based in Sweden, saw a double-digit share price rise of over 10% in the past couple of months on the OM. Less-covered, small caps sees 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 examine Endomines’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Endomines
What is Endomines worth?
The stock is currently trading at KR9.04 on the share market, which means it is overvalued by 92% compared to my intrinsic value of SEK4.71. Not the best news for investors looking to buy! Another thing to keep in mind is that Endomines’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Endomines?
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. Endomines’s earnings over the next few years are expected to increase by 81.23%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? ENDO’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ENDO should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on ENDO for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ENDO, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.