At AU$25.52, Is It Time To Put Premier Investments Limited (ASX:PMV) On Your Watch List?

Premier Investments Limited (ASX:PMV), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the ASX. 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? Today I will analyse the most recent data on Premier Investments’s outlook and valuation to see if the opportunity still exists.

Check out the opportunities and risks within the AU Specialty Retail industry.

What's The Opportunity In Premier Investments?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% below my intrinsic value, which means if you buy Premier Investments today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth A$30.86, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Premier Investments has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Premier Investments 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. 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. Though in the case of Premier Investments, it is expected to deliver a negative earnings growth of -13%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? PMV seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on PMV for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on PMV should the price fluctuate below its true value.

If you'd like to know more about Premier Investments as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Premier Investments, and understanding it should be part of your investment process.

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.

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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.