Is Galliford Try Holdings plc (LON:GFRD) Potentially Undervalued?

While Galliford Try Holdings plc (LON:GFRD) might not have the largest market cap around , it saw significant share price movement during recent months on the LSE, rising to highs of UK£2.73 and falling to the lows of UK£2.25. 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 Galliford Try Holdings' current trading price of UK£2.40 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 Galliford Try Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Galliford Try Holdings

Is Galliford Try Holdings Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 17% below our intrinsic value, which means if you buy Galliford Try Holdings today, you’d be paying a fair price for it. And if you believe the company’s true value is £2.88, then there’s not much of an upside to gain from mispricing. In addition to this, Galliford Try Holdings has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Galliford Try Holdings 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. Galliford Try Holdings' earnings over the next few years are expected to increase by 77%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? GFRD’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 tabs on GFRD, 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 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 Galliford Try Holdings, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Galliford Try Holdings and you'll want to know about them.

If you are no longer interested in Galliford Try Holdings, 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.