Is The SimplyBiz Group plc (LON:SBIZ) Potentially Undervalued?

While The SimplyBiz Group plc (LON:SBIZ) might not be the most widely known stock at the moment, it led the AIM gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at SimplyBiz Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for SimplyBiz Group

Is SimplyBiz Group still cheap?

According to my valuation model, the stock is currently overvalued by about 29%, trading at UK£1.73 compared to my intrinsic value of £1.34. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that SimplyBiz Group’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 SimplyBiz Group?

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 3.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for SimplyBiz Group, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in SBIZ’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SBIZ should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on SBIZ for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for SimplyBiz Group and we think they deserve your attention.

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This article by Simply Wall St is general in nature. 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.
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