PSB Industries (EPA:PSB), which is in the packaging business, and is based in France, received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €29 at one point, and dropping to the lows of €23.8. 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 PSB Industries's current trading price of €23.8 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 PSB Industries’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for PSB Industries
Is PSB Industries still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that PSB Industries’s ratio of 14.22x is trading slightly above its industry peers’ ratio of 11.9x, which means if you buy PSB Industries today, you’d be paying a relatively reasonable price for it. And if you believe PSB Industries should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since PSB Industries’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.
What kind of growth will PSB Industries generate?
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. PSB Industries’s earnings over the next few years are expected to increase by 37%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? PSB’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at PSB? Will you have enough confidence to invest in the company should the price drop below its fair value?