Exploring 3 Undervalued Small Caps With Insider Buying On ASX

The Australian market has recently experienced a slight downturn, with the ASX 200 closing down by 0.57%, amid record high wages and mixed sector performances, including declines in Telecommunications and Industrials. In this fluctuating environment, investors often look for small-cap stocks that show potential resilience or growth prospects, particularly those where insider buying might indicate confidence in the company's future performance.

Top 10 Undervalued Small Caps With Insider Buying In Australia

Name	PE	PS	Discount to Fair Value	Value Rating
GWA Group	16.4x	1.5x	41.15%	★★★★★☆
Collins Foods	17.8x	0.7x	5.64%	★★★★☆☆
Dicker Data	19.4x	0.7x	-60.43%	★★★★☆☆
Corporate Travel Management	24.1x	2.9x	41.25%	★★★★☆☆
Eagers Automotive	11.5x	0.3x	38.30%	★★★★☆☆
FINEOS Corporation Holdings	NA	3.5x	45.22%	★★★★☆☆
Tabcorp Holdings	NA	0.5x	6.98%	★★★★☆☆
SHAPE Australia	15.0x	0.3x	29.22%	★★★☆☆☆
Coventry Group	244.4x	0.4x	-23.58%	★★★☆☆☆
BSP Financial Group	7.7x	2.7x	2.52%	★★★☆☆☆

Click here to see the full list of 26 stocks from our Undervalued ASX Small Caps With Insider Buying screener.

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

Deterra Royalties (ASX:DRR)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Deterra Royalties is a company focused on managing and acquiring royalty arrangements, with a market capitalization of A$2.31 billion.

Operations: Deterra Royalties primarily generates revenue through royalty arrangements, with its recent revenue recorded at A$240.51 million. The gross profit margin has shown a trend of being above 96% in the past few periods, indicating high profitability relative to cost of goods sold (COGS). Operating expenses are relatively low compared to revenue, contributing to a strong net income margin around 64%.

PE: 12.4x

Deterra Royalties, a smaller player in the Australian market, has caught attention due to insider confidence with share purchases occurring from May to September 2024. Despite earnings forecasted to decline by 6.9% annually over the next three years, its strategic positioning in royalties offers potential for steady cash flow. However, reliance on external borrowing poses higher risk funding challenges. Recent presentations and meetings suggest active engagement with stakeholders, indicating management's commitment to transparency and growth amidst industry fluctuations.

• Click here and access our complete valuation analysis report to understand the dynamics of Deterra Royalties.

• Understand Deterra Royalties' track record by examining our Past report.

FINEOS Corporation Holdings (ASX:FCL)

Simply Wall St Value Rating: ★★★★☆☆

Overview: FINEOS Corporation Holdings is a company that specializes in providing software solutions for the life, accident, and health insurance industries with a market capitalization of approximately €0.44 billion.

Operations: FINEOS Corporation Holdings generates its revenue primarily from the Software & Programming segment, with a reported revenue of €122.24 million. The company's cost structure includes significant expenses in research and development, which amounted to €57.15 million, contributing to operating expenses of €103.15 million for the most recent period. Gross profit margin has shown variability over time and was recorded at 71.53% in the latest period analyzed.

PE: -31.5x

FINEOS Corporation Holdings, a prominent player in software systems for life, accident, and health insurance, has shown insider confidence with recent share purchases. Despite being dropped from the S&P Global BMI Index in September 2024, the company continues to expand its client base. Voya Financial's selection of FINEOS' platform underscores its industry relevance. While reporting a net loss of €5.32 million for H1 2024, revenue guidance between €130-135 million indicates potential growth prospects as earnings are projected to grow significantly per year.

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

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

Tabcorp Holdings (ASX:TAH)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Tabcorp Holdings operates in the gaming services and wagering and media sectors, with a focus on providing betting, gaming products, and entertainment services, and has a market cap of A$4.95 billion.

Operations: Wagering and Media is the primary revenue stream, contributing A$2.16 billion, while Gaming Services adds A$176.1 million. The gross profit margin has consistently been 100% across several periods. Operating expenses include significant allocations to sales and marketing, with recent figures showing expenditures of A$1.15 billion to A$1.21 billion in this area alone.

PE: -0.9x

Tabcorp Holdings, a smaller player in the Australian market, is drawing attention for its potential value despite recent challenges. The company reported a net loss of A$1.36 billion for the year ending June 2024, contrasting with a profit of A$66.5 million the previous year. Interestingly, insider confidence is evident as an executive purchased 250,000 shares worth approximately A$215,000 recently. While funding relies entirely on external borrowing—considered higher risk—the forecasted earnings growth of over 112% annually suggests room for recovery and growth potential.

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

• Examine Tabcorp Holdings' past performance report to understand how it has performed in the past.

Turning Ideas Into Actions

• Click this link to deep-dive into the 26 companies within our Undervalued ASX Small Caps With Insider Buying screener.
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Ready For A Different Approach?

• 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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