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Collins Foods Limited (ASX:CKF), is not the largest company out there, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$9.16 and falling to the lows of AU$7.52. 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 Collins Foods' current trading price of AU$8.27 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 Collins Foods’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 Collins Foods
What's The Opportunity In Collins Foods?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 9.1% below our intrinsic value, which means if you buy Collins Foods today, you’d be paying a fair price for it. And if you believe the company’s true value is A$9.10, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Collins Foods’s low beta implies that the stock is less volatile than the wider market.
What does the future of Collins Foods look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Collins Foods' earnings over the next few years are expected to increase by 56%, 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? It seems like the market has already priced in CKF’s positive outlook, 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on CKF, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.