Is It Time To Consider Buying SoftwareONE Holding AG (VTX:SWON)?

While SoftwareONE Holding AG (VTX:SWON) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SWX, rising to highs of CHF13.89 and falling to the lows of CHF11.08. 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 SoftwareONE Holding's current trading price of CHF12.15 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 SoftwareONE Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for SoftwareONE Holding

Is SoftwareONE Holding still cheap?

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 15.67x is currently trading slightly below its industry peers’ ratio of 20.1x, which means if you buy SoftwareONE Holding today, you’d be paying a decent price for it. And if you believe that SoftwareONE Holding should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like SoftwareONE Holding’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 SoftwareONE Holding?

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 grow by 39% over the next couple of years, the future seems bright for SoftwareONE Holding. 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? SWON’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 SWON? 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 an eye on SWON, 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 SWON, 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.

So while earnings quality is important, it's equally important to consider the risks facing SoftwareONE Holding at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of SoftwareONE Holding.

If you are no longer interested in SoftwareONE Holding, 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.