Is Now The Time To Look At Buying Netcompany Group A/S (CPH:NETC)?

Netcompany Group A/S (CPH:NETC), might not be a large cap stock, but it saw significant share price movement during recent months on the CPSE, rising to highs of kr.418 and falling to the lows of kr.260. 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 Netcompany Group's current trading price of kr.269 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 Netcompany Group’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 Netcompany Group

What Is Netcompany Group 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 Netcompany Group’s ratio of 27.39x is trading slightly below its industry peers’ ratio of 30.29x, which means if you buy Netcompany Group today, you’d be paying a decent price for it. And if you believe that Netcompany Group 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. Furthermore, Netcompany Group’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 Netcompany Group?

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. Netcompany Group's earnings over the next few years are expected to increase by 92%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in NETC’s positive outlook, 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 NETC? 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 NETC, 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 NETC, 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 while earnings quality is important, it's equally important to consider the risks facing Netcompany Group 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 Netcompany Group.

If you are no longer interested in Netcompany Group, 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.