Should You Think About Buying TClarke plc (LON:CTO) Now?

While TClarke plc (LON:CTO) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the LSE, rising to highs of UK£1.70 and falling to the lows of UK£1.36. 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 TClarke's current trading price of UK£1.39 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 TClarke’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 TClarke

Is TClarke Still Cheap?

Great news for investors – TClarke is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 TClarke’s ratio of 6.5x is below its peer average of 11.96x, which indicates the stock is trading at a lower price compared to the Construction industry. What’s more interesting is that, TClarke’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of TClarke look like?

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LSE:CTO Earnings and Revenue Growth September 6th 2022

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. However, with a relatively muted profit growth of 6.6% expected over the next year, growth doesn’t seem like a key driver for a buy decision for TClarke, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since CTO is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on CTO for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CTO. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.