888 Holdings plc (LON:888), which is in the hospitality business, and is based in Gibraltar, saw significant share price movement during recent months on the LSE, rising to highs of UK£1.67 and falling to the lows of UK£1.30. 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 888 Holdings’s current trading price of UK£1.30 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 888 Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is 888 Holdings worth?
Great news for investors – 888 Holdings is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is £2.43, but it is currently trading at UK£1.30 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that 888 Holdings’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of 888 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for 888 Holdings, at least in the near future.
What this means for you:
Are you a shareholder? Although 888 is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to 888, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on 888 for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on 888 Holdings. You can find everything you need to know about 888 Holdings in the latest infographic research report. If you are no longer interested in 888 Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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