3 Undervalued Small Caps In Australia With Insider Action To Watch

The Australian market has shown positive momentum, rising 2.2% over the last week and 11% over the past year, with earnings expected to grow by 13% annually in the coming years. In this favorable environment, identifying undervalued small-cap stocks with insider action can present compelling opportunities for investors looking to capitalize on potential growth.

Top 10 Undervalued Small Caps With Insider Buying In Australia

Name	PE	PS	Discount to Fair Value	Value Rating
Healius	NA	0.6x	45.29%	★★★★★☆
Eagers Automotive	9.7x	0.3x	40.00%	★★★★☆☆
MFF Capital Investments	4.9x	3.4x	45.64%	★★★★☆☆
Elders	22.9x	0.5x	49.21%	★★★★☆☆
Codan	31.1x	4.6x	30.56%	★★★★☆☆
Neuren Pharmaceuticals	12.5x	8.4x	-47.87%	★★★★☆☆
Dicker Data	22.8x	0.8x	7.79%	★★★☆☆☆
Deterra Royalties	12.9x	8.3x	1.31%	★★★☆☆☆
Coventry Group	297.7x	0.5x	-0.18%	★★★☆☆☆
RAM Essential Services Property Fund	NA	6.2x	42.05%	★★★☆☆☆

Click here to see the full list of 14 stocks from our Undervalued ASX Small Caps With Insider Buying screener.

We'll examine a selection from our screener results.

Eagers Automotive (ASX:APE)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Eagers Automotive is a leading car retailing company with operations primarily focused on the sale of new and used vehicles, and it has a market cap of A$3.50 billion.

Operations: Car Retailing generates the bulk of revenue at A$9.85 billion. Gross profit margin has seen fluctuations, with a recent figure of 18.60% as of December 2023. Operating expenses include significant allocations to General & Administrative and D&A Expenses, impacting net income margins which stood at 2.85% in the same period.

PE: 9.7x

Eagers Automotive, a small-cap stock in Australia, has announced a share repurchase program to buy back up to 25.8 million shares, representing 10% of its issued share capital by June 2025. The company is actively seeking acquisitions and investments as part of its Next100 Strategy, aiming for revenue growth despite forecasted earnings declines of 0.7% annually over the next three years. Insider confidence is evident with recent purchases by executives in May and June 2024.

• Dive into the specifics of Eagers Automotive here with our thorough valuation report.

• Explore historical data to track Eagers Automotive's performance over time in our Past section.

Codan (ASX:CDA)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Codan is a technology company specializing in communications and metal detection products, with a market cap of A$1.23 billion.

Operations: Codan generates revenue primarily from its Communications and Metal Detection segments, with the former contributing A$291.50 million and the latter A$212.20 million. The company's gross profit margin has shown variability, reaching 60.25% in June 2017 before declining to 54.42% by December 2023. Operating expenses have increased over time, impacting net income margins which were at 14.67% as of December 2023 compared to higher figures in previous years such as 20.67% in June 2021.

PE: 31.1x

Codan, a notable player in the communications and metal detection industries, has recently seen insider confidence with significant share purchases over the past six months. The company is expected to report its Fiscal Year 2024 results on August 16, 2024. Codan's earnings are forecasted to grow by 16.2% annually, indicating strong future prospects despite relying entirely on external borrowing for funding. This growth potential positions Codan as an attractive option among undervalued Australian small caps in A$.

• Navigate through the intricacies of Codan with our comprehensive valuation report here.

• Learn about Codan's historical performance.

NRW Holdings (ASX:NWH)

Simply Wall St Value Rating: ★★★★★☆

Overview: NRW Holdings is an Australian company that provides diversified services across the mining, civil infrastructure, and urban development sectors with a market cap of A$1.47 billion.

Operations: NRW Holdings derives its revenue primarily from three segments: MET (A$791.81 million), Civil (A$655.46 million), and Mining (A$1.52 billion). The company has seen its gross profit margin fluctuate, reaching 47.99% in the most recent period ending August 2024. Operating expenses have consistently been a significant portion of costs, with general and administrative expenses accounting for A$1.04 billion in the latest period.

PE: 15.2x

NRW Holdings, a key player in Australia's small-cap segment, has shown promising signs of being undervalued. Recent insider confidence is evident with notable share purchases over the past few months. The company projects earnings growth of 9.63% annually and reaffirmed its revenue guidance at A$2.9 billion for fiscal 2024. Additionally, NRW announced an ordinary dividend of A$0.09 per share for the six months ending June 30, 2024, payable on October 9th, highlighting strong financial health and potential future growth momentum.

• Delve into the full analysis valuation report here for a deeper understanding of NRW Holdings.

• Assess NRW Holdings' past performance with our detailed historical performance reports.

Turning Ideas Into Actions

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Looking For Alternative Opportunities?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
• Find companies with promising cash flow potential yet trading below their fair value.

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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