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Pets at Home Group Plc (LON:PETS), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Pets at Home Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Pets at Home Group Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 13.18% above our intrinsic value, which means if you buy Pets at Home Group today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth £2.01, there’s only an insignificant downside when the price falls to its real value. What's more, Pets at Home Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.
See our latest analysis for Pets at Home Group
Can we expect growth from Pets at Home 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. 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. Pets at Home Group's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? PETS’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 financial strength of the company. 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 PETS, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.