Kromek Group plc (AIM:KMK), a semiconductors and semiconductor equipment company based in United Kingdom, received a lot of attention from a substantial price movement on the AIM in the over the last few months, increasing to £0.36 at one point, and dropping to the lows of £0.26. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether KMK’s current trading price of £0.28 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 KMK’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 KMK
Is KMK still cheap?Good news, investors! KMK is still a bargain right now. In this instance, I’ve used price-to-book ratio (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that KMK’s ratio of 1.7x is below its peer average of 5.6x, which suggests the stock is undervalued compared to the semiconductors and semiconductor equipment industry. However, given that KMK’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of KMK look like?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.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 KMK future expectations. With profit expected to grow by 38.39% over the next couple of years, the future seems bright for KMK. It looks like higher cash flows 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 KMK is currently undervalued, it may be a great time to accumulate more of 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 capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on KMK for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy KMK. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Kromek Group. You can find everything you need to know about KMK in the latest infographic research report. If you are no longer interested in Kromek Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.