Although IG Design Group plc (LON:IGR) may not be the best-known stock at the moment, it has garnered a lot of attention due to a substantial price move on AIM over the course of of the last few months, rising to £4.60 UK at one point. , and falling as low as £1.07 in the UK. Certain movements in the stock price can give investors a better opportunity to get into the stock and potentially buy at a lower price. A question that needs to be answered is whether IG Design Group’s current trading price of UK£1.07 reflects the true value of the small cap? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at IG Design 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 IG Design Group
What is the opportunity at IG Design Group?
The stock price looks reasonable at the moment based on my multiple price model, where I compare the company’s price-earnings ratio to the industry average. In this case, I used the Price/Earnings (PE) ratio since there is not enough information to reliably predict the stock’s cash flow. I find that IG Design Group’s ratio of 15.5x trades slightly above its industry peers’ ratio of 12.74x, which means that if you buy IG Design Group today, you would pay a relatively reasonable price. And if you think IG Design Group should be trading within this range, then there really isn’t room for the stock price to rise above the levels of other industry peers over the long term. Although there may be an opportunity to buy in the future. This is because IG Design Group’s beta (a measure of share price volatility) is high, which means that its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s stock will likely fall more than the rest of the market, providing an excellent buying opportunity.
What does the future of IG Design Group look like?
Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Buying a big company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With revenues expected to grow by 11% in double digits over the next two years, the outlook is positive for IG Design Group. If the level of expenses can be maintained, it seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What does this mean to you :
Are you a shareholder? It looks like the market has already priced in the positive outlook for IGR, with stocks trading around industry price multiples. However, there are also other important factors that we have not considered today, such as the financial strength of the company. Have these factors changed since the last time you consulted the IGR? Will you have enough conviction to buy if the price moves below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on the IGR, it might not be the most optimal time to buy, given that it’s trading around industry price multiples. However, the positive outlook is encouraging for IGR, which means that it is worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Keep in mind that when it comes to analyzing a stock, the risks involved should be noted. When we did our research, we found 4 warning signs for IG Design Group (1 is a little worrying!) which we believe deserve your full attention.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.