Should You Think About Buying CAR Group Limited (ASX:CAR) Now?

CAR Group Limited (ASX:CAR), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the ASX. The company's trading levels have approached the yearly peak, following the recent bounce in the share price. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine CAR Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for CAR Group

Is CAR Group Still Cheap?

According to our valuation model, CAR Group seems to be fairly priced at around 5.66% above our intrinsic value, which means if you buy CAR Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is A$35.09, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, CAR Group’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will CAR Group generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. CAR Group's earnings over the next few years are expected to increase by 79%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? CAR’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on CAR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into CAR Group, you'd also look into what risks it is currently facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of CAR Group.

If you are no longer interested in CAR Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.