Mosaic Brands Limited (ASX:MOZ), might not be a large cap stock, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$1.16 and falling to the lows of AU$0.78. 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 Mosaic Brands' current trading price of AU$0.80 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 Mosaic Brands’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Mosaic Brands
Is Mosaic Brands still cheap?
Mosaic Brands appears to be overvalued by 39% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$0.80 on the market compared to my intrinsic value of A$0.57. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Mosaic Brands’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Mosaic Brands 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. However, with a relatively muted revenue growth of 6.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Mosaic Brands, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in MOZ’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe MOZ should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on MOZ for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Mosaic Brands, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Mosaic Brands (1 is potentially serious) you should be familiar with.
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This article by Simply Wall St is general in nature. 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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About ASX:MOZ
Mosaic Brands
Engages in the retail of women’s apparel and accessories in Australia and New Zealand.
Medium-low and good value.
