Is It Time To Consider Buying H+H International A/S (CPH:HH)?

H+H International A/S (CPH:HH), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the CPSE over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. 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 H+H International’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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What Is H+H International Worth?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that H+H International’s ratio of 34.26x is above its peer average of 16.02x, which suggests the stock is trading at a higher price compared to the Basic Materials industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that H+H International’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Check out our latest analysis for H+H International

What does the future of H+H International look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. H+H International's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in HH’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe HH should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on HH for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for HH, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into H+H International, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for H+H International (of which 1 can't be ignored!) you should know about.

If you are no longer interested in H+H International, 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.