ASX Stocks Estimated To Be Trading Below Fair Value In September 2024

Over the last 7 days, the Australian market has remained flat, yet over the past 12 months, it has risen by 11%, with earnings forecast to grow by 12% annually. In this environment, identifying stocks that are trading below their fair value can present excellent opportunities for investors looking to capitalize on potential growth.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Name	Current Price	Fair Value (Est)	Discount (Est)
Mader Group (ASX:MAD)	A$5.33	A$10.53	49.4%
Duratec (ASX:DUR)	A$1.30	A$2.59	49.9%
Elders (ASX:ELD)	A$9.37	A$18.11	48.3%
Hansen Technologies (ASX:HSN)	A$4.26	A$8.22	48.1%
DroneShield (ASX:DRO)	A$1.465	A$2.70	45.8%
VEEM (ASX:VEE)	A$1.70	A$3.24	47.6%
Ansell (ASX:ANN)	A$30.65	A$56.70	45.9%
Millennium Services Group (ASX:MIL)	A$1.145	A$2.24	48.9%
Clover (ASX:CLV)	A$0.385	A$0.72	46.6%
Superloop (ASX:SLC)	A$1.74	A$3.31	47.5%

Click here to see the full list of 50 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Here we highlight a subset of our preferred stocks from the screener.

Domino's Pizza Enterprises (ASX:DMP)

Overview: Domino's Pizza Enterprises Limited operates retail food outlets and has a market cap of approximately A$2.78 billion.

Operations: The company generates revenue of A$2.38 billion from its restaurant operations.

Estimated Discount To Fair Value: 24.2%

Domino's Pizza Enterprises appears undervalued based on cash flows, trading at A$30.58, below its estimated fair value of A$40.33. Despite high debt levels and past shareholder dilution, the company reported strong earnings growth with net income rising to A$95.96 million from A$40.57 million last year. Revenue increased slightly to A$2.38 billion, and earnings are forecasted to grow 20.5% annually over the next three years, outpacing market expectations.

• According our earnings growth report, there's an indication that Domino's Pizza Enterprises might be ready to expand.
• Unlock comprehensive insights into our analysis of Domino's Pizza Enterprises stock in this financial health report.

DroneShield (ASX:DRO)

Overview: DroneShield Limited develops, commercializes, and sells hardware and software technology for drone detection and security in Australia and the United States, with a market cap of A$1.28 billion.

Operations: Revenue Segments (in millions of A$): Aerospace & Defense: 67.52

Estimated Discount To Fair Value: 45.8%

DroneShield is trading at A$1.47, significantly below its estimated fair value of A$2.70, indicating it may be undervalued based on cash flows. Despite a net loss of A$4.8 million for the half year ended June 2024, revenue nearly doubled to A$23.99 million from the previous year. The company has completed a follow-on equity offering worth A$120 million and is forecasted to achieve significant earnings growth (45.2% annually) over the next three years, outpacing market expectations.

• Our earnings growth report unveils the potential for significant increases in DroneShield's future results.
• Click to explore a detailed breakdown of our findings in DroneShield's balance sheet health report.

Elders (ASX:ELD)

Overview: Elders Limited, with a market cap of A$1.45 billion, supplies agricultural products and services to rural and regional customers mainly in Australia.

Operations: The company's revenue segments include A$2.54 billion from its Branch Network, A$341.19 million from Wholesale Products, and A$120.14 million from Feed and Processing Services.

Estimated Discount To Fair Value: 48.3%

Elders Limited, trading at A$9.37, is significantly undervalued compared to its estimated fair value of A$18.11 based on discounted cash flow analysis. Despite a high level of debt and declining profit margins (2.1% from 3.4% last year), earnings are forecast to grow 22.8% annually over the next three years, outpacing the Australian market's expected growth rate of 12.3%. Recent board changes include appointing Glenn Davis as a non-executive Director by November 2024.

• Insights from our recent growth report point to a promising forecast for Elders' business outlook.
• Click here to discover the nuances of Elders with our detailed financial health report.

Next Steps

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Ready To Venture Into Other Investment Styles?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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