Is Now The Time To Look At Buying Mind Gym plc (LON:MIND)?

While Mind Gym plc (LON:MIND) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the AIM over the last few months, increasing to UK£0.63 at one point, and dropping to the lows of UK£0.34. 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 Mind Gym's current trading price of UK£0.34 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 Mind Gym’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 Mind Gym

What's The Opportunity In Mind Gym?

Great news for investors – Mind Gym is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Mind Gym’s ratio of 11.76x is below its peer average of 18.1x, which indicates the stock is trading at a lower price compared to the Professional Services industry. However, given that Mind Gym’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Mind Gym?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a relatively muted revenue growth of 0.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Mind Gym, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since MIND is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on MIND for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MIND. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

So while earnings quality is important, it's equally important to consider the risks facing Mind Gym at this point in time. Every company has risks, and we've spotted 4 warning signs for Mind Gym (of which 3 shouldn't be ignored!) you should know about.

If you are no longer interested in Mind Gym, 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.