Is There Now An Opportunity In discoverIE Group plc (LON:DSCV)?

discoverIE Group plc (LON:DSCV), might not be a large cap stock, but it led the LSE gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at discoverIE Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for discoverIE Group

What Is discoverIE Group Worth?

According to my valuation model, discoverIE Group seems to be fairly priced at around 11.25% above my intrinsic value, which means if you buy discoverIE Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £7.20, there’s only an insignificant downside when the price falls to its real value. Furthermore, discoverIE Group’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will discoverIE Group generate?

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. With profit expected to more than double over the next couple of years, the future seems bright for discoverIE Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in DSCV’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 tabs on DSCV, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into 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 discoverIE Group, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with discoverIE Group, and understanding these should be part of your investment process.

If you are no longer interested in discoverIE 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.