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High Liner Foods Incorporated (TSE:HLF), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$16.74 and falling to the lows of CA$15.08. 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 High Liner Foods' current trading price of CA$16.53 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 High Liner Foods’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is High Liner Foods Still Cheap?
Great news for investors – High Liner Foods is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that High Liner Foods’s ratio of 5.66x is below its peer average of 12.84x, which indicates the stock is trading at a lower price compared to the Food industry. High Liner Foods’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
See our latest analysis for High Liner Foods
Can we expect growth from High Liner Foods?
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. 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. High Liner Foods' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since HLF is currently trading below the industry PE ratio, it may be a great time to accumulate more of 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 price multiple.