3 Undervalued Small Caps In Australia With Recent Insider Activity

As the Australian market continues to show mixed performance, with the ASX200 closing up 0.1% at 8,212 points and notable gains in the Materials sector, investors are increasingly looking for opportunities beyond the big miners and banks. In this context, small-cap stocks with recent insider activity can present intriguing investment possibilities, especially when they appear undervalued amidst broader market movements. Identifying such stocks requires careful consideration of their fundamentals and recent developments. Here are three undervalued small-cap stocks in Australia that have seen significant insider activity recently.

Top 10 Undervalued Small Caps With Insider Buying In Australia

Name	PE	PS	Discount to Fair Value	Value Rating
GWA Group	16.7x	1.6x	40.84%	★★★★★★
Magellan Financial Group	7.5x	4.7x	38.02%	★★★★★☆
Bigtincan Holdings	NA	1.1x	48.63%	★★★★★☆
Tabcorp Holdings	NA	0.5x	20.59%	★★★★★☆
SHAPE Australia	14.0x	0.3x	35.35%	★★★★☆☆
Bapcor	NA	0.9x	43.88%	★★★★☆☆
Eagers Automotive	10.9x	0.3x	37.20%	★★★★☆☆
Dicker Data	21.4x	0.8x	-75.30%	★★★☆☆☆
Corporate Travel Management	21.9x	2.6x	-2.59%	★★★☆☆☆
Credit Corp Group	21.1x	2.8x	39.61%	★★★☆☆☆

Click here to see the full list of 21 stocks from our Undervalued ASX Small Caps With Insider Buying screener.

Let's review some notable picks from our screened stocks.

Corporate Travel Management (ASX:CTD)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Corporate Travel Management is a global provider of travel services with operations in Asia, Europe, North America, and Australia/New Zealand, and has a market cap of A$3.13 billion.

Operations: The company generates revenue from travel services across Asia (A$63.66M), Europe (A$168.32M), North America (A$309.63M), and Australia and New Zealand (A$168.82M). For the period ending September 30, 2023, it achieved a gross profit margin of 40.18% and a net income margin of 13.70%. Operating expenses include significant allocations to general & administrative expenses and depreciation & amortization costs, impacting overall profitability.

PE: 21.9x

Corporate Travel Management (CTM) has shown promising signs of being undervalued, especially with insider confidence demonstrated by Jamie Pherous purchasing 87,500 shares for A$1.4 million in recent months. The company reported a revenue increase to A$716.86 million for the year ending June 30, 2024, up from A$660.08 million the previous year. Additionally, CTM completed a buyback of 1.13% of its shares for A$26.1 million and extended its equity buyback plan until June 2025, reflecting strategic financial management and potential growth opportunities ahead.

• Take a closer look at Corporate Travel Management's potential here in our valuation report.

• Understand Corporate Travel Management's track record by examining our Past report.

Neuren Pharmaceuticals (ASX:NEU)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Neuren Pharmaceuticals is a biopharmaceutical company focused on developing therapies for neurodevelopmental and neurodegenerative disorders, with a market cap of A$1.20 billion.

Operations: Neuren Pharmaceuticals generates revenue primarily through product sales, with significant fluctuations observed over time. The company experienced a notable improvement in gross profit margin, reaching 88.47% as of September 2024. Operating expenses have varied but were A$5.28 million in the latest period, impacting net income outcomes significantly across different quarters.

PE: 16.6x

Neuren Pharmaceuticals, a small cap in Australia, recently reported a significant drop in half-year earnings with sales at A$24.33 million compared to A$62.93 million the previous year. Despite this, their Phase 2 trial for Angelman syndrome showed promising results. The company also updated its full-year sales guidance to A$340-370 million for 2024. Insider confidence is evident as they bought shares between July and August 2024, indicating potential growth ahead despite current financial challenges.

• Click here to discover the nuances of Neuren Pharmaceuticals with our detailed analytical valuation report.

• Gain insights into Neuren Pharmaceuticals' historical performance by reviewing our past performance report.

Sims (ASX:SGM)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Sims operates in the metal recycling industry with segments including Global Trading, SA Recycling, North America Metals, Sims Lifecycle Services, and Australia/New Zealand Metals, and has a market cap of A$3.20 billion.

Operations: The company generates revenue primarily from North America Metals (A$4.49 billion), Australia/New Zealand Metals (A$1.60 billion), Global Trading (A$771.20 million), and Sims Lifecycle Services (A$350 million). Over the analyzed periods, the net income margin has shown variability, reaching as high as 6.46% and dipping to -5.39%.

PE: 1366.8x

Sims Limited, a small-cap Australian company, recently announced a dividend of A$0.10 per share for the year ending June 30, 2024, payable on October 16. Despite reporting sales of A$7.22 billion compared to last year's A$6.66 billion, they faced a net loss of A$57.8 million versus a previous net income of A$181.1 million due to large one-off items impacting results and lower profit margins (0.02% vs 3%). Insider confidence is evident as key personnel have been purchasing shares over the past six months, suggesting potential growth prospects despite current challenges in earnings and funding structure relying solely on external borrowing sources.

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

• Explore historical data to track Sims' performance over time in our Past section.

Where To Now?

• Explore the 21 names from our Undervalued ASX Small Caps With Insider Buying screener here.
• Have you diversified into these companies? Leverage the power of Simply Wall St's portfolio to keep a close eye on market movements affecting your investments.
• Elevate your portfolio with Simply Wall St, the ultimate app for investors seeking global market coverage.

Searching for a Fresh Perspective?

• 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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