- Australia
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- Specialty Stores
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- ASX:AX1
At AU$2.02, Is It Time To Put Accent Group Limited (ASX:AX1) On Your Watch List?
While Accent Group Limited (ASX:AX1) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the ASX. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stockās share price. However, what if the stock is still a bargain? Letās take a look at Accent Groupās outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Accent Group
Is Accent Group Still Cheap?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. Weāve used the price-to-earnings ratio in this instance because thereās not enough visibility to forecast its cash flows. The stockās ratio of 15.67x is currently trading slightly above its industry peersā ratio of 14.33x, which means if you buy Accent Group today, youād be paying a relatively sensible price for it. And if you believe Accent Group should be trading in this range, then there isnāt really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Accent Groupās share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Accent Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so letās also take a look at the company's future expectations. With profit expected to grow by 31% over the next couple of years, the future seems bright for Accent Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in AX1ās positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we havenāt considered today, such as the track record of its management team. Have these factors changed since the last time you looked at AX1? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If youāve been keeping an eye on AX1, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for AX1, which means itās 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 Accent Group, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Accent Group.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
About ASX:AX1
Accent Group
Engages in the retail, distribution, and franchise of lifestyle footwear, apparel, and accessories in Australia and New Zealand.
Reasonable growth potential with adequate balance sheet.