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GDI Integrated Facility Services Inc. (TSE:GDI), might not be a large cap stock, but it saw a decent share price growth in the teens level on the TSX over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine GDI Integrated Facility Services’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for GDI Integrated Facility Services
Is GDI Integrated Facility Services still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.1% below my intrinsic value, which means if you buy GDI Integrated Facility Services today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$52.80, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since GDI Integrated Facility Services’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 GDI Integrated Facility Services generate?
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. With revenues expected to grow by a double-digit 24% over the next couple of years, the outlook is positive for GDI Integrated Facility Services. If the level of expenses is able to be maintained, 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? GDI’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 confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on GDI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.