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SJR in Scandinavia AB (publ) (STO:SJR B), which is in the professional services business, and is based in Sweden, saw significant share price movement during recent months on the OM, rising to highs of SEK51.6 and falling to the lows of SEK35.8. 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 SJR in Scandinavia's current trading price of SEK38.8 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 SJR in Scandinavia’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for SJR in Scandinavia
Is SJR in Scandinavia still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 16.13x is currently trading in-line with its industry peers’ ratio, which means if you buy SJR in Scandinavia today, you’d be paying a relatively reasonable price for it. In addition to this, it seems like SJR in Scandinavia’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will SJR in Scandinavia generate?
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. With profit expected to grow by 50% over the next couple of years, the future seems bright for SJR in Scandinavia. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SJR B’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 financial strength of the company. Have these factors changed since the last time you looked at SJR B? Will you have enough conviction to buy should the price fluctuate below the true value?