Spotless Group Holdings Limited (ASX:SPO), a commercial services company based in Australia, saw its share price hover around a small range of A$1.1 to A$1.16 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Spotless Group Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Spotless Group Holdings
Is Spotless Group Holdings still cheap?Great news for investors – Spotless Group Holdings is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is A$6.34, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Spotless Group Holdings’s share price is 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.
What kind of growth will Spotless Group Holdings generate?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 the company’s future expectations. Though in the case of Spotless Group Holdings, it is expected to deliver a negative revenue growth of -1.03% over the next couple of years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although SPO 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 SPO, 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 an eye on SPO for a while, 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 Spotless Group Holdings. You can find everything you need to know about Spotless Group Holdings in the latest infographic research report. If you are no longer interested in Spotless Group Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.