At AU$21.77, Is Premier Investments Limited (ASX:PMV) Worth Looking At Closely?

While Premier Investments Limited (ASX:PMV) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the ASX, rising to highs of AU$25.35 and falling to the lows of AU$21.10. 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 Premier Investments' current trading price of AU$21.77 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Premier Investments’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 Premier Investments

What's the opportunity in Premier Investments?

Great news for investors – Premier Investments is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is A$28.66, but it is currently trading at AU$21.77 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Premier Investments’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Premier Investments?

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. Premier Investments' earnings over the next few years are expected to increase by 38%, 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? Since PMV is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on PMV for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PMV. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Premier Investments at this point in time. Every company has risks, and we've spotted 1 warning sign for Premier Investments you should know about.

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

When trading Premier Investments or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.