In This Article:
While Cake Box Holdings Plc (LON:CBOX) might not have the largest market cap around , it saw significant share price movement during recent months on the AIM, rising to highs of UK£2.05 and falling to the lows of UK£1.81. 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 Cake Box Holdings' current trading price of UK£1.90 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 Cake Box Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Cake Box Holdings
Is Cake Box Holdings Still Cheap?
The share price seems sensible at the moment 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 15.35x is currently trading slightly above its industry peers’ ratio of 15.04x, which means if you buy Cake Box Holdings today, you’d be paying a relatively reasonable price for it. And if you believe Cake Box Holdings should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Cake Box Holdings’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 does the future of Cake Box Holdings look like?
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 19% over the next couple of years, the outlook is positive for Cake Box Holdings. 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? CBOX’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 CBOX? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?