At AU$0.51, Is It Time To Put Southern Cross Electrical Engineering Limited (ASX:SXE) On Your Watch List?

While Southern Cross Electrical Engineering Limited (ASX:SXE) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$0.61 at one point, and dropping to the lows of AU$0.51. 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 Southern Cross Electrical Engineering's current trading price of AU$0.51 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 Southern Cross Electrical Engineering’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 Southern Cross Electrical Engineering

What's the opportunity in Southern Cross Electrical Engineering?

Good news, investors! Southern Cross Electrical Engineering is still a bargain right now. According to my valuation, the intrinsic value for the stock is A$0.79, but it is currently trading at AU$0.51 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Southern Cross Electrical Engineering’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Southern Cross Electrical Engineering?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. With profit expected to grow by 57% over the next couple of years, the future seems bright for Southern Cross Electrical Engineering. It looks like higher cash flow 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 SXE is currently undervalued, it may be a great time to increase 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 SXE for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SXE. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

If you want to dive deeper into Southern Cross Electrical Engineering, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Southern Cross Electrical Engineering you should know about.

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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. 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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