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Motorpoint Group Plc (LON:MOTR), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. While good news for shareholders, the company has traded much higher in the past year. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Motorpoint Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Motorpoint Group
What's The Opportunity In Motorpoint Group?
Good news, investors! Motorpoint Group is still a bargain right now. According to our valuation, the intrinsic value for the stock is £1.77, but it is currently trading at UK£1.34 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Motorpoint Group’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Motorpoint Group 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 revenues expected to grow by a double-digit 29% over the next couple of years, the outlook is positive for Motorpoint Group. If the level of expenses is able to be maintained, 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? Since MOTR is currently undervalued, 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 capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on MOTR for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MOTR. 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.