SIG plc (LON:SHI), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£0.33 at one point, and dropping to the lows of UK£0.28. 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 SIG's current trading price of UK£0.30 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 SIG’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for SIG

Is SIG Still Cheap?

According to my valuation model, SIG seems to be fairly priced at around 9.0% below my intrinsic value, which means if you buy SIG today, you’d be paying a reasonable price for it. And if you believe the company’s true value is £0.33, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since SIG’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 SIG 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. However, with a relatively muted revenue growth of 8.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for SIG, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in SHI’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 SHI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.