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Burberry Group plc (LON:BRBY), might not be a large cap stock, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£20.63 and falling to the lows of UK£15.26. 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 Burberry Group's current trading price of UK£15.91 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 Burberry Group’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 Burberry Group
What's the opportunity in Burberry Group?
Good news, investors! Burberry Group is still a bargain right now. According to my valuation, the intrinsic value for the stock is £24.75, but it is currently trading at UK£15.91 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Burberry Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Burberry Group?
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. However, with a relatively muted profit growth of 7.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Burberry Group, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since BRBY is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on BRBY for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BRBY. 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.