Qt Group Oyj (HLSE:QTCOM), a software company based in Finland, saw a decent share price growth in the teens level on the HLSE over the last few months. 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 examine Qt Group Oyj’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Qt Group Oyj
What’s the opportunity in Qt Group Oyj?According to my valuation model, Qt Group Oyj seems to be fairly priced at around 5.16% below my intrinsic value, which means if you buy Qt Group Oyj today, you’d be paying a fair price for it. And if you believe the company’s true value is €6.43, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like Qt Group Oyj’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Qt Group 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. Though in the case of Qt Group Oyj, it is expected to deliver a negative earnings growth of -7.54%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, QTCOM appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on QTCOM for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on QTCOM should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Qt Group Oyj. You can find everything you need to know about Qt Group Oyj in the latest infographic research report. If you are no longer interested in Qt Group Oyj, you can use our free platform to see my list of over 50 other stocks with a high growth potential.