Is Now An Opportune Moment To Examine Badger Infrastructure Solutions Ltd. (TSE:BDGI)?

While Badger Infrastructure Solutions Ltd. (TSE:BDGI) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the TSX over the last few months. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Badger Infrastructure Solutions’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Badger Infrastructure Solutions

What's The Opportunity In Badger Infrastructure Solutions?

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. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Badger Infrastructure Solutions’s ratio of 26.46x is trading slightly below its industry peers’ ratio of 31.81x, which means if you buy Badger Infrastructure Solutions today, you’d be paying a decent price for it. And if you believe Badger Infrastructure Solutions should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Badger Infrastructure Solutions’s 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.

Can we expect growth from Badger Infrastructure Solutions?

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. With profit expected to grow by 89% over the next couple of years, the future seems bright for Badger Infrastructure Solutions. 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 BDGI’s positive outlook, with shares trading around industry price multiples. 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 BDGI? 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 you’ve been keeping tabs on BDGI, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for BDGI, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Badger Infrastructure Solutions at this point in time. While conducting our analysis, we found that Badger Infrastructure Solutions has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in Badger Infrastructure Solutions, 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.