At CA$13.77, Is It Time To Put Polaris Renewable Energy Inc. (TSE:PIF) On Your Watch List?

Polaris Renewable Energy Inc. (TSE:PIF), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$15.63 and falling to the lows of CA$13.60. 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 Polaris Renewable Energy's current trading price of CA$13.77 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 Polaris Renewable Energy’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 Polaris Renewable Energy

What Is Polaris Renewable Energy Worth?

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. 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 Polaris Renewable Energy’s ratio of 19.8x is trading slightly above its industry peers’ ratio of 18.15x, which means if you buy Polaris Renewable Energy today, you’d be paying a relatively reasonable price for it. And if you believe Polaris Renewable Energy should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like Polaris Renewable Energy’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Polaris Renewable Energy?

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. Polaris Renewable Energy's earnings growth are expected to be in the teens in the upcoming year, 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? PIF’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 track record of its management team. Have these factors changed since the last time you looked at PIF? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on PIF, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for PIF, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 4 warning signs for Polaris Renewable Energy (1 doesn't sit too well with us) you should be familiar with.

If you are no longer interested in Polaris Renewable Energy, 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.