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RS Group plc (LON:RS1), 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£6.89 at one point, and dropping to the lows of UK£5.75. 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 RS Group's current trading price of UK£5.75 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at RS 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 RS Group?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 9.58% above our intrinsic value, which means if you buy RS Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £5.25, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, RS Group has a low beta, which suggests its share price is less volatile than the wider market.
Check out our latest analysis for RS Group
What does the future of RS 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. 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. RS Group's earnings over the next few years are expected to increase by 20%, indicating a highly optimistic future ahead. This should lead to more robust 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 RS1’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 an eye on RS1, 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.