Why Frontier Digital Ventures Limited (ASX:FDV) Could Be Worth Watching

While Frontier Digital Ventures Limited (ASX:FDV) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$0.63 at one point, and dropping to the lows of AU$0.42. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Frontier Digital Ventures' current trading price of AU$0.45 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Frontier Digital Ventures’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Frontier Digital Ventures

What Is Frontier Digital Ventures Worth?

According to our valuation model, Frontier Digital Ventures seems to be fairly priced at around 2.1% below our intrinsic value, which means if you buy Frontier Digital Ventures today, you’d be paying a reasonable price for it. And if you believe the company’s true value is A$0.46, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Frontier Digital Ventures’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Frontier Digital Ventures look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In the upcoming year, Frontier Digital Ventures' earnings are expected to increase by 72%, 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? FDV’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 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 an eye on FDV, now may not be the most optimal 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 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. While conducting our analysis, we found that Frontier Digital Ventures has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in Frontier Digital Ventures, 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.