Is It Time To Consider Buying Ten Lifestyle Group Plc (LON:TENG)?

Ten Lifestyle Group Plc (LON:TENG), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the AIM. 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? Today I will analyse the most recent data on Ten Lifestyle Group’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Ten Lifestyle Group

What's The Opportunity In Ten Lifestyle Group?

According to my valuation model, Ten Lifestyle Group seems to be fairly priced at around 3.3% below my intrinsic value, which means if you buy Ten Lifestyle Group today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth £0.88, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Ten Lifestyle Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Ten Lifestyle Group 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. 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. In Ten Lifestyle Group's case, its revenues over the next few years are expected to grow by 38%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? TENG’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 TENG, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which 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 Ten Lifestyle Group as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Ten Lifestyle Group has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in Ten Lifestyle 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.