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While Altitude Group plc (LON:ALT) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the AIM over the last few months, increasing to UK£0.28 at one point, and dropping to the lows of UK£0.23. 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 Altitude Group's current trading price of UK£0.23 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 Altitude Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In Altitude Group?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Altitude Group’s ratio of 23.58x is trading slightly below its industry peers’ ratio of 29.2x, which means if you buy Altitude Group today, you’d be paying a decent price for it. And if you believe Altitude Group should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Altitude Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
View our latest analysis for Altitude Group
What does the future of Altitude Group look like?
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 more than double over the next couple of years, the future seems bright for Altitude Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.