Innofactor Oyj (HEL:IFA1V), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the HLSE. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Innofactor Oyj’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What's the opportunity in Innofactor Oyj?
Great news for investors – Innofactor Oyj is still trading at a fairly cheap price 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 10.32x is currently well-below the industry average of 53.19x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Innofactor Oyj’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Innofactor Oyj?
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. However, with a relatively muted profit growth of 7.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Innofactor Oyj, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since IFA1V is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on IFA1V for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy IFA1V. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.
If you'd like to know more about Innofactor Oyj as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 3 warning signs for Innofactor Oyj and you'll want to know about these.
If you are no longer interested in Innofactor 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.