BSA Limited (ASX:BSA), a commercial services company based in Australia, received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to A$0.38 at one point, and dropping to the lows of A$0.32. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether BSA’s current trading price of A$0.33 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 BSA’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 BSA
What is BSA worth?
Great news for investors – BSA is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is A$0.57, but it is currently trading at AU$0.33 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that BSA’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of BSA 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. With profit expected to more than double over the next couple of years, the future seems bright for BSA. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since BSA is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on BSA for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BSA. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.