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While Jumbo Interactive Limited (ASX:JIN) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the ASX, rising to highs of AU$14.97 and falling to the lows of AU$10.63. 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 Jumbo Interactive's current trading price of AU$11.67 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 Jumbo Interactive’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Jumbo Interactive
Is Jumbo Interactive still cheap?
Good news, investors! Jumbo Interactive is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. 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 28.1x is currently well-below the industry average of 37.18x, meaning that it is trading at a cheaper price relative to its peers. However, given that Jumbo Interactive’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Jumbo Interactive 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. Jumbo Interactive's earnings over the next few years are expected to increase by 43%, 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? Since JIN is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive 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 financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on JIN for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy JIN. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.