As the Australian market prepares to open with a 0.38% increase, it reflects the positive momentum seen on Wall Street, driven by robust US job figures despite geopolitical tensions in the Middle East. This backdrop of economic resilience and market optimism sets an intriguing stage for small-cap stocks, which often thrive in dynamic environments due to their agility and growth potential. In this context, identifying undervalued small-cap companies with insider activity can offer insights into promising opportunities within Australia's diverse market landscape.
Top 10 Undervalued Small Caps With Insider Buying In Australia
Overview: Abacus Storage King operates in the self-storage industry, focusing on rental and merchandising services, with a market capitalization of A$1.5 billion.
Operations: ASK generates revenue primarily from rental and merchandising activities, with the latest figures reaching A$220.48 million. The cost of goods sold (COGS) stands at A$41.90 million, contributing to a gross profit margin of 80.99%. Operating expenses are significant, totaling A$70.77 million in the most recent period, while non-operating expenses have shown variability but recently recorded a negative value of -A$30.36 million. The net income margin has experienced fluctuations, with a notable increase to 62.67% in the latest period due to changes in non-operating expenses.
PE: 12.5x
Abacus Storage King, a smaller player in the Australian market, has seen insider confidence with recent share purchases. Despite its growth potential, with revenue expected to increase by 6.74% annually, earnings are projected to decline by 1.7% over the next three years due to large one-off items affecting results. The company relies entirely on external borrowing for funding, adding risk but also flexibility. Recent leadership changes may influence future strategy and performance dynamics positively or negatively.
Overview: Credit Corp Group is a financial services company specializing in debt ledger purchasing in Australia, New Zealand, and the United States, as well as offering consumer lending services across these regions, with a market capitalization of A$1.73 billion.
Operations: The company generates revenue primarily from debt ledger purchasing in the United States and Australia/New Zealand, as well as consumer lending across these regions. Over recent periods, it has experienced fluctuations in its net income margin, with a notable decline to 13.42% by June 2024. Gross profit margins have also shown variability, reaching 87.09% in the same period. Operating expenses are a significant part of its cost structure, with general and administrative expenses being the largest component.
PE: 21.1x
Credit Corp Group, an Australian company in a smaller market segment, has recently drawn attention due to its financial dynamics and insider confidence. Over the past year, insiders have shown belief in the company's potential by purchasing shares. Despite facing a decline in net income to A$50.71 million from A$91.25 million last year, Credit Corp forecasts improved earnings for 2025 with NPAT expected between A$90 million and A$100 million. The recent appointment of Sarah Brennan as Non-Executive Director signals ongoing board renewal efforts aimed at steering future growth amidst challenging funding conditions primarily reliant on external borrowing rather than customer deposits.
Overview: GWA Group is a company that specializes in water solutions, with operations centered around providing innovative products for the building and construction sectors, and it has a market capitalization of A$1.01 billion.
Operations: GWA Group's revenue primarily stems from its Water Solutions segment, with recent figures at A$413.49 million. The company's cost of goods sold (COGS) is A$251.14 million, resulting in a gross profit of A$162.35 million and a gross profit margin of 39.26%. Operating expenses are recorded at A$96.32 million, impacting the net income margin which stands at 9.34%.
PE: 16.4x
GWA Group, a small Australian company, recently reported A$413.49 million in sales for the year ending June 2024, with net income dipping to A$38.63 million from the previous year's A$43.16 million. Despite this decline in earnings per share from continuing operations to A$0.146, insider confidence is evident through recent stock purchases by executives over the past few months. The company's growth prospects are underscored by an 11% annual earnings growth forecast, though funding relies entirely on external borrowing, which carries higher risk than customer deposits. As leadership transitions with Bernadette Inglis stepping up as Chair in November 2024, GWA's future direction may offer intriguing opportunities for investors seeking potential value amidst its current market position.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ASX:ASK ASX:CCP and ASX:GWA.
