Is It Too Late To Consider Buying Pennant International Group plc (LON:PEN)?

By
Simply Wall St
Published
August 31, 2021
AIM:PEN
Source: Shutterstock

Pennant International Group plc (LON:PEN), might not be a large cap stock, but it saw significant share price movement during recent months on the AIM, rising to highs of UK£0.45 and falling to the lows of UK£0.28. 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 Pennant International Group's current trading price of UK£0.28 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 Pennant International Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Pennant International Group

What is Pennant International Group worth?

According to my valuation model, the stock is currently overvalued by about 36%, trading at UK£0.28 compared to my intrinsic value of £0.20. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Pennant International Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Pennant International Group?

earnings-and-revenue-growth
AIM:PEN Earnings and Revenue Growth September 1st 2021

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. Pennant International Group's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? PEN’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe PEN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on PEN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for PEN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Pennant International Group, you'd also look into what risks it is currently facing. To that end, you should learn about the 3 warning signs we've spotted with Pennant International Group (including 1 which shouldn't be ignored).

If you are no longer interested in Pennant International Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you’re looking to trade Pennant International Group, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.