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Hays plc (LON:HAS), is not the largest company out there, but it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£0.83 at one point, and dropping to the lows of UK£0.71. 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 Hays' current trading price of UK£0.77 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 Hays’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 Hays
What's The Opportunity In Hays?
Great news for investors – Hays is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is £1.05, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Hays’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.
What does the future of Hays 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. However, with an expected decline of -2.5% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Hays. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although HAS is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to HAS, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on HAS for a while, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.