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Tornado Infrastructure Equipment Ltd. (CVE:TGH), is not the largest company out there, but it saw significant share price movement during recent months on the TSXV, rising to highs of CA$1.21 and falling to the lows of CA$0.95. 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 Tornado Infrastructure Equipment's current trading price of CA$1.02 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 Tornado Infrastructure Equipment’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 Tornado Infrastructure Equipment
What Is Tornado Infrastructure Equipment Worth?
Good news, investors! Tornado Infrastructure Equipment 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. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 12.21x is currently well-below the industry average of 31.6x, meaning that it is trading at a cheaper price relative to its peers. Tornado Infrastructure Equipment’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.
Can we expect growth from Tornado Infrastructure Equipment?
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. In Tornado Infrastructure Equipment's case, its revenues over the next few years are expected to grow by 43%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since TGH 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.