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Kromek Group plc (LON:KMK), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the AIM over the last few months, increasing to UK£0.075 at one point, and dropping to the lows of UK£0.05. 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 Kromek Group's current trading price of UK£0.05 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 Kromek Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Kromek Group
Is Kromek Group Still Cheap?
According to our valuation model, Kromek Group seems to be fairly priced at around 11.89% above our intrinsic value, which means if you buy Kromek Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth £0.04, there’s only an insignificant downside when the price falls to its real value. What's more, Kromek Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Kromek Group?
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. Though in the case of Kromek Group, it is expected to deliver a negative earnings growth of -3.2%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Currently, KMK appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on KMK for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on KMK should the price fluctuate below its true value.