In This Article:
AO World plc (LON:AO.), is not the largest company out there, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£1.10 and falling to the lows of UK£0.95. 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 AO World's current trading price of UK£0.98 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 AO World’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 AO World
What Is AO World Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 17% below our intrinsic value, which means if you buy AO World today, you’d be paying a fair price for it. And if you believe that the stock is really worth £1.18, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, AO World has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will AO World 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. With profit expected to grow by 43% over the next couple of years, the future seems bright for AO World. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? AO.’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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on AO., now may not be the most optimal 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.