Is Now An Opportune Moment To Examine WildBrain Ltd. (TSE:WILD)?

WildBrain Ltd. (TSE:WILD), might not be a large cap stock, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$3.23 and falling to the lows of CA$2.35. 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 WildBrain's current trading price of CA$2.35 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 WildBrain’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for WildBrain

What's the opportunity in WildBrain?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 25.64x is currently trading slightly above its industry peers’ ratio of 23.84x, which means if you buy WildBrain today, you’d be paying a relatively reasonable price for it. And if you believe that WildBrain should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, WildBrain’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.

Can we expect growth from WildBrain?

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. 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. With profit expected to more than double in the upcoming, the future appears to be extremely bright for WildBrain. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? WILD’s optimistic future growth appears to have been factored into the current share price, 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 WILD? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

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

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for WildBrain and you'll want to know about this.

If you are no longer interested in WildBrain, 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.