ITS Group (EPA:ITS), which is in the it business, and is based in France, maintained its current share price over the past couple of month on the ENXTPA, with a relatively tight range of €4.36 to €4.74. 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 ITS 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 ITS Group
Is ITS Group still cheap?
Great news for investors – ITS Group is still trading at a fairly cheap price. I’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 11.25x is currently well-below the industry average of 16.82x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, ITS Group’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from ITS 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. 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. With profit expected to grow by a double-digit 12% over the next couple of years, the outlook is positive for ITS Group. 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? Since ITS is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive 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 undervaluation.
Are you a potential investor? If you’ve been keeping an eye on ITS for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ITS. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.