Is Now The Time To Look At Buying Propel Funeral Partners Limited (ASX:PFP)?

While Propel Funeral Partners Limited (ASX:PFP) might not be the most widely known stock at the moment, it had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of AU$2.85 to AU$3.08. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Propel Funeral Partners’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 Propel Funeral Partners

What is Propel Funeral Partners worth?

According to my valuation model, Propel Funeral Partners seems to be fairly priced at around 16% below my intrinsic value, which means if you buy Propel Funeral Partners today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$3.52, then there’s not much of an upside to gain from mispricing. Furthermore, Propel Funeral Partners’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Propel Funeral Partners?

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. With profit expected to grow by 48% over the next couple of years, the future seems bright for Propel Funeral Partners. 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? It seems like the market has already priced in PFP’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 the stock? 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 tabs on PFP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Our analysis shows 2 warning signs for Propel Funeral Partners (1 is significant!) and we strongly recommend you look at these before investing.

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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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