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Shoe Zone plc (LON:SHOE), is not the largest company out there, but it saw significant share price movement during recent months on the AIM, rising to highs of UK£1.08 and falling to the lows of UK£0.90. 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 Shoe Zone's current trading price of UK£0.94 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 Shoe Zone’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Shoe Zone Still Cheap?
Good news, investors! Shoe Zone is still a bargain right now according to our price multiple model, which compares 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 Shoe Zone’s ratio of 5.83x is below its peer average of 17.61x, which indicates the stock is trading at a lower price compared to the Specialty Retail industry. What’s more interesting is that, Shoe Zone’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Check out our latest analysis for Shoe Zone
Can we expect growth from Shoe Zone?
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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Shoe Zone, at least in the near future.
What This Means For You
Are you a shareholder? Although SHOE is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to SHOE, or whether diversifying into another stock may be a better move for your total risk and return.