Is Now The Time To Look At Buying Ten Lifestyle Group Plc (LON:TENG)?

While Ten Lifestyle Group Plc (LON:TENG) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the AIM. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. Less-covered, small caps sees 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 examine Ten Lifestyle Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Ten Lifestyle Group

What Is Ten Lifestyle Group Worth?

According to our valuation model, Ten Lifestyle Group seems to be fairly priced at around 7.18% above our intrinsic value, which means if you buy Ten Lifestyle Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth £0.68, then there isn’t really any room for the share price grow beyond what it’s currently trading. 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.

Can we expect growth from Ten Lifestyle 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 an expected decline of -1.5% in revenues over the next year, short term growth isn’t a driver for a buy decision for Ten Lifestyle Group. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, TENG appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on TENG for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on TENG should the price fluctuate below its true value.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 2 warning signs with Ten Lifestyle Group, and understanding them should be part of your investment process.

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.

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