Is GDI Integrated Facility Services Inc. (TSE:GDI) Potentially Undervalued?

GDI Integrated Facility Services Inc. (TSE:GDI), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. 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 GDI Integrated Facility Services’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for GDI Integrated Facility Services

What is GDI Integrated Facility Services worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14.03% above my intrinsic value, which means if you buy GDI Integrated Facility Services today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is CA$42.97, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, GDI Integrated Facility Services has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from GDI Integrated Facility Services?

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. GDI Integrated Facility Services' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth 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 GDI’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 track record of its management team. 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 GDI, 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 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 1 warning sign for GDI Integrated Facility Services and you'll want to know about this.

If you are no longer interested in GDI Integrated Facility Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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.

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