Is Now The Time To Look At Buying Hopscotch Global PR Group (EPA:HOP)?

Hopscotch Global PR Group (EPA:HOP), is not the largest company out there, but it received a lot of attention from a substantial price increase on the ENXTPA 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 take a look at Hopscotch Global PR Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Hopscotch Global PR Group

What is Hopscotch Global PR Group worth?

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. 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 Hopscotch Global PR Group’s ratio of 8.57x is trading slightly below its industry peers’ ratio of 11.02x, which means if you buy Hopscotch Global PR Group today, you’d be paying a decent price for it. And if you believe Hopscotch Global PR Group should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Hopscotch Global PR Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Hopscotch Global PR 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. However, with a negative profit growth of -12% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Hopscotch Global PR Group. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? HOP seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on HOP, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HOP for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This 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 gel your views on HOP should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Hopscotch Global PR Group, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Hopscotch Global PR Group (1 is a bit concerning) you should be familiar with.

If you are no longer interested in Hopscotch Global PR 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.