Should You Think About Buying Badger Infrastructure Solutions Ltd. (TSE:BDGI) Now?

Badger Infrastructure Solutions Ltd. (TSE:BDGI), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$51.25 at one point, and dropping to the lows of CA$40.22. 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 Badger Infrastructure Solutions' current trading price of CA$42.89 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 Badger Infrastructure Solutions’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out 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 26.48x is trading slightly below its industry peers’ ratio of 31.42x, which means if you buy Badger Infrastructure Solutions today, you’d be paying a reasonable price for it. And if you believe that Badger Infrastructure Solutions should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Although, there may be an opportunity to buy in the future. This is because Badger Infrastructure Solutions’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.

What does the future of Badger Infrastructure Solutions look like?

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 let’s also take a look at the company's future expectations. In the upcoming year, Badger Infrastructure Solutions' earnings are expected to increase by 71%, 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? 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 an eye on BDGI, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast 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.

If you want to dive deeper into Badger Infrastructure Solutions, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Badger Infrastructure Solutions you should be aware of.

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.