Is It Time To Consider Buying Clipper Logistics plc (LON:CLG)?

By
Simply Wall St
Published
November 20, 2021
LSE:CLG
Source: Shutterstock

Clipper Logistics plc (LON:CLG), is not the largest company out there, but it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£8.82 at one point, and dropping to the lows of UK£6.43. 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 Clipper Logistics' current trading price of UK£6.80 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 Clipper Logistics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Clipper Logistics

What is Clipper Logistics worth?

Good news, investors! Clipper Logistics is still a bargain right now according to my price multiple model, which compares 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 Clipper Logistics’s ratio of 32.12x is below its peer average of 44.62x, which indicates the stock is trading at a lower price compared to the Commercial Services industry. However, given that Clipper Logistics’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 Clipper Logistics?

earnings-and-revenue-growth
LSE:CLG Earnings and Revenue Growth November 21st 2021

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 55% over the next couple of years, the future seems bright for Clipper Logistics. 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? Since CLG is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. 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 CLG for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CLG. 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 investment decision.

If you want to dive deeper into Clipper Logistics, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 4 warning signs for Clipper Logistics and you'll want to know about these.

If you are no longer interested in Clipper Logistics, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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