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While DLH Holdings Corp. (NASDAQ:DLHC) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQCM, rising to highs of US$10.88 and falling to the lows of US$7.97. 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 DLH Holdings' current trading price of US$8.08 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 DLH Holdings’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 DLH Holdings
What's The Opportunity In DLH Holdings?
Great news for investors – DLH Holdings is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 15.71x is currently well-below the industry average of 24.93x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because DLH Holdings’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 does the future of DLH Holdings look like?
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. In the upcoming year, DLH Holdings' earnings are expected to increase by 32%, 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? Since DLHC is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.