Stock Analysis

Is There Now An Opportunity In Keller Group plc (LON:KLR)?

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LSE:KLR
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While Keller Group plc (LON:KLR) might not be the most widely known stock at the moment, 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 examine Keller Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Keller Group

What is Keller Group worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.46% above my intrinsic value, which means if you buy Keller Group today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth £9.48, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Keller Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

What kind of growth will Keller Group generate?

earnings-and-revenue-growth
LSE:KLR Earnings and Revenue Growth August 5th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 relatively muted revenue growth of 8.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Keller Group, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in KLR’s future 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on KLR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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'd like to know more about Keller Group as a business, it's important to be aware of any risks it's facing. Our analysis shows 2 warning signs for Keller Group (1 is potentially serious!) and we strongly recommend you look at these before investing.

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