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TFF Group (ENXTPA:TFF), a packaging company based in France, received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €48.8 at one point, and dropping to the lows of €39. 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 TFF Group’s current trading price of €39.4 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 TFF 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 TFF Group
What is TFF Group worth?
TFF Group is currently overpriced based on my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that TFF Group’s ratio of 25.72x is above its peer average of 16.66x, which suggests the stock is overvalued compared to the Packaging industry. Furthermore, TFF Group’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 true value, 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.
Can we expect growth from TFF 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. With profit expected to grow by 30.97% over the next couple of years, the future seems bright for TFF Group. 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? TFF’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TFF should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.