Ophir Energy Plc (LSE:OPHR), an energy company based in United Kingdom, saw significant share price volatility over the past couple of months on the LSE, rising to the highs of £0.81 and falling to the lows of £0.63. 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 OPHR’s current trading price of £0.63 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 OPHR’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 OPHR
Is OPHR still cheap?According to my relative valuation model, OPHR seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 0.4x is currently trading slightly below its industry peers’ ratio of 0.7x, which means if you buy OPHR today, you’d be paying a relatively fair price for it. And if you believe OPHR should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like OPHR’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because OPHR’s stock is less volatile than the wider market given its low beta.
Can we expect growth from OPHR?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 OPHR future expectations. With profit expected to grow by 72.64% over the next year, the near-term future seems bright for OPHR. 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? It seems like the market has already priced in OPHR’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at OPHR? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on OPHR, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for OPHR, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Ophir Energy. You can find everything you need to know about OPHR in the latest infographic research report. If you are no longer interested in Ophir Energy, you can use our free platform to see my list of over 50 other stocks with a high growth potential.