Is It Time To Consider Buying Calian Group Ltd. (TSE:CGY)?

Calian Group Ltd. (TSE:CGY), which is in the commercial services business, and is based in Canada, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of CA$32.87 to CA$34.88. However, is this the true valuation level 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.

See our latest analysis for Calian Group

What is Calian Group worth?

According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Calian Group’s ratio of 17.26x is trading slightly above its industry peers’ ratio of 17.13x, which means if you buy Calian Group today, you’d be paying a relatively fair price for it. And if you believe Calian Group should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Calian Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of Calian Group look like?

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. 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. Calian Group’s earnings over the next few years are expected to increase by 31%, 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? CGY’s optimistic future growth appears to have been factored into the current share price, 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 CGY? Will you have enough conviction to buy should the price fluctuate below the true value?

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.