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While Time Out Group plc (LON:TMO) might not have the largest market cap around , it maintained its current share price over the past couple of month on the AIM, with a relatively tight range of UK£0.52 to UK£0.57. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Time Out Group’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 Time Out Group
What's The Opportunity In Time Out Group?
Good news, investors! Time Out Group is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is £0.86, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Time Out Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Time Out Group 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. Though in the case of Time Out Group, it is expected to deliver a negative revenue growth of -9.6% over the next couple of years, 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? Although TMO is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to TMO, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on TMO for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For instance, we've identified 2 warning signs for Time Out Group (1 shouldn't be ignored) you should be familiar with.