Why Boston Pizza Royalties Income Fund (TSE:BPF.UN) Could Be Worth Watching

Boston Pizza Royalties Income Fund (TSE:BPF.UN), is not the largest company out there, but it saw a decent share price growth in the teens level on the TSX over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Boston Pizza Royalties Income Fund’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Boston Pizza Royalties Income Fund

What's the opportunity in Boston Pizza Royalties Income Fund?

Good news, investors! Boston Pizza Royalties Income Fund is still a bargain right now. According to my valuation, the intrinsic value for the stock is CA$19.37, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Boston Pizza Royalties Income Fund’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 Boston Pizza Royalties Income Fund 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. However, with a negative profit growth of -20% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Boston Pizza Royalties Income Fund. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although BPF.UN is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to BPF.UN, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on BPF.UN for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Boston Pizza Royalties Income Fund, you'd also look into what risks it is currently facing. When we did our research, we found 4 warning signs for Boston Pizza Royalties Income Fund (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

If you are no longer interested in Boston Pizza Royalties Income Fund, 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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