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Wajax Corporation (TSE:WJX), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$26.73 and falling to the lows of CA$23.94. 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 Wajax's current trading price of CA$24.89 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 Wajax’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 Wajax
What's The Opportunity In Wajax?
Great news for investors – Wajax is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio 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 7.74x is currently well-below the industry average of 11.44x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because Wajax’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 kind of growth will Wajax generate?
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. However, with a relatively muted revenue growth of 9.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Wajax, at least in the short term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since WJX 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.
Are you a potential investor? If you’ve been keeping an eye on WJX for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy WJX. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.