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Dexterra Group Inc. (TSE:DXT), 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$8.09 and falling to the lows of CA$5.46. 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 Dexterra Group's current trading price of CA$5.55 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 Dexterra Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Dexterra Group
What is Dexterra Group worth?
Great news for investors – Dexterra Group is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’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 17.25x is currently well-below the industry average of 28.64x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Dexterra Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.
Can we expect growth from Dexterra Group?
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 53% over the next year, the near-term future seems bright for Dexterra 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? Since DXT is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.