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Reach plc (LON:RCH), is not the largest company out there, but it led the LSE gainers with a relatively large price hike in the past couple of weeks. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on Reach’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Reach
What Is Reach Worth?
According to our valuation model, Reach seems to be fairly priced at around 15% below our intrinsic value, which means if you buy Reach today, you’d be paying a reasonable price for it. And if you believe the company’s true value is £1.15, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Reach’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Reach look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Reach's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in RCH’s positive outlook, with shares trading around its fair value. 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 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 tabs on RCH, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about Reach as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for Reach (1 is concerning!) that we believe deserve your full attention.