3 ASX Stocks That May Be Trading Below Their Estimated Value

November 04, 2024

The Australian stock market has recently experienced a mix of gains and losses, with the ASX200 closing up 0.56% at 8164 points, driven by strong performances in IT and Utilities sectors. However, the turbulence within certain industries, such as Energy and Materials, highlights the importance of identifying stocks that may be trading below their estimated value. In this environment, finding stocks that are potentially undervalued requires careful consideration of their fundamentals and sector performance amidst current market conditions.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Name	Current Price	Fair Value (Est)	Discount (Est)
Regal Partners (ASX:RPL)	A$3.56	A$6.50	45.2%
DUG Technology (ASX:DUG)	A$1.845	A$3.49	47.2%
Ansell (ASX:ANN)	A$30.91	A$58.03	46.7%
MLG Oz (ASX:MLG)	A$0.62	A$1.15	46.3%
Audinate Group (ASX:AD8)	A$8.99	A$17.81	49.5%
Megaport (ASX:MP1)	A$6.81	A$13.42	49.3%
IDP Education (ASX:IEL)	A$13.99	A$27.38	48.9%
Millennium Services Group (ASX:MIL)	A$1.145	A$2.24	48.9%
Structural Monitoring Systems (ASX:SMN)	A$0.69	A$1.27	45.7%
Energy One (ASX:EOL)	A$5.65	A$11.07	48.9%

Click here to see the full list of 39 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

We'll examine a selection from our screener results.

Gold Road Resources (ASX:GOR)

Overview: Gold Road Resources Limited, with a market cap of A$2.14 billion, is involved in the exploration of gold properties in Western Australia through its subsidiaries.

Operations: The company generates revenue from its Development and Production segment, amounting to A$454.82 million.

Estimated Discount To Fair Value: 37.6%

Gold Road Resources is trading at A$1.98, significantly below its estimated fair value of A$3.17, suggesting it may be undervalued based on cash flows. Earnings are forecast to grow at 20.9% annually, outpacing the Australian market's growth rate of 12.3%. Despite a recent decline in sales and net income for the half-year ending June 2024, strong future earnings projections and potential M&A activity could enhance its valuation appeal further.

ASX:GOR Discounted Cash Flow as at Nov 2024

PolyNovo (ASX:PNV)

Overview: PolyNovo Limited designs, manufactures, and sells biodegradable medical devices in the United States, Australia, New Zealand, and internationally with a market cap of A$1.40 billion.

Operations: The company generates revenue of A$103.23 million from the development, manufacturing, and commercialization of the NovoSorb technology.

Estimated Discount To Fair Value: 34.4%

PolyNovo is currently trading at A$2.02, considerably below its estimated fair value of A$3.08, highlighting potential undervaluation in terms of cash flows. The company recently turned profitable with net income of A$5.26 million for the year ending June 2024, compared to a loss previously. Earnings are projected to grow significantly at 38.4% annually over the next three years, outpacing the broader Australian market's growth rate and enhancing its investment appeal despite insider selling activities noted recently.

ASX:PNV Discounted Cash Flow as at Nov 2024

Temple & Webster Group (ASX:TPW)

Overview: Temple & Webster Group Ltd operates as an online retailer specializing in furniture, homewares, and home improvement products in Australia, with a market cap of A$1.36 billion.

Operations: The company's revenue is primarily derived from the sale of furniture, homewares, and home improvement products, totaling A$497.84 million.

Estimated Discount To Fair Value: 16.1%

Temple & Webster Group is trading at A$11.4, below its estimated fair value of A$13.59, indicating potential undervaluation based on cash flows. Despite a drop in net income to A$1.8 million for the year ending June 2024 from A$8.3 million previously, earnings are forecasted to grow significantly at 40.2% annually over three years, surpassing the Australian market's growth rate and enhancing its investment appeal amid recent executive changes with a new CFO appointment.

ASX:TPW Discounted Cash Flow as at Nov 2024

Summing It All Up

Click this link to deep-dive into the 39 companies within our Undervalued ASX Stocks Based On Cash Flows screener.
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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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