At UK£8.12, Is It Time To Put RS Group plc (LON:RS1) On Your Watch List?

RS Group plc (LON:RS1), might not be a large cap stock, but it saw a decent share price growth of 18% on the LSE over the last few months. The recent share price gains has brought the company back closer to its yearly peak. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine RS Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for RS Group

Is RS Group Still Cheap?

According to our valuation model, RS Group seems to be fairly priced at around 3.9% below our intrinsic value, which means if you buy RS Group today, you’d be paying a fair price for it. And if you believe the company’s true value is £8.44, then there’s not much of an upside to gain from mispricing. Furthermore, RS Group’s low beta implies that the stock is less volatile than the wider market.

What does the future of RS Group look like?

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. With profit expected to grow by 44% over the next couple of years, the future seems bright for RS 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 RS1’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on RS1, 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 RS Group, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with RS Group, and understanding it should be part of your investment process.

If you are no longer interested in RS 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com