When Should You Buy Sword Group S.E. (EPA:SWP)?

Sword Group S.E. (EPA:SWP), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the ENXTPA. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Sword Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Sword Group

Is Sword Group still cheap?

According to my valuation model, Sword Group seems to be fairly priced at around 6.53% above my intrinsic value, which means if you buy Sword Group today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth €46.46, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Sword Group has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Sword Group 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. 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. Sword Group's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? SWP’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on SWP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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.

If you want to dive deeper into Sword Group, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in Sword Group.

If you are no longer interested in Sword 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.