Is It Time To Consider Buying Terveystalo Oyj (HEL:TTALO)?

While Terveystalo Oyj (HEL:TTALO) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the HLSE, rising to highs of €11.94 and falling to the lows of €10.62. 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 Terveystalo Oyj's current trading price of €11.22 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 Terveystalo Oyj’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 Terveystalo Oyj

What's the opportunity in Terveystalo Oyj?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 18.38x is currently trading slightly below its industry peers’ ratio of 19.33x, which means if you buy Terveystalo Oyj today, you’d be paying a reasonable price for it. And if you believe that Terveystalo Oyj 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 Terveystalo Oyj’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.

What does the future of Terveystalo Oyj look like?

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 27% over the next couple of years, the future seems bright for Terveystalo Oyj. 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? It seems like the market has already priced in TTALO’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 financial strength of the company. Have these factors changed since the last time you looked at TTALO? 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 TTALO, 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 TTALO, 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.

If you want to dive deeper into Terveystalo Oyj, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Terveystalo Oyj you should know about.

If you are no longer interested in Terveystalo Oyj, 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.