At $32.05, Is Calian Group Ltd (TSE:CGY) A Buy?

By
Simply Wall St
Published
January 01, 2018
TSX:CGY
Source: Shutterstock

Calian Group Ltd (TSX:CGY), a commercial services and supplies company based in Canada, received a lot of attention from a substantial price movement on the TSX in the over the last few months, increasing to CA$34.73 at one point, and dropping to the lows of CA$30.5. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Calian Group's current trading price of CA$32.05 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 Calian Group’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 Calian Group

Is Calian Group still cheap?

According to my valuation model, Calian Group seems to be fairly priced at around 8% above my intrinsic value, which means if you buy Calian Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth CA$29.68, there’s only an insignificant downside when the price falls to its real value. Furthermore, it seems like Calian Group’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Calian Group generate?

TSX:CGY Future Profit Jan 1st 18
TSX:CGY Future Profit Jan 1st 18
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. Calian Group’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to 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 Calian Group’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on Calian Group, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Calian Group. You can find everything you need to know about Calian Group in the latest infographic research report. If you are no longer interested in Calian Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.

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