Management Consulting Group PLC (LSE:MMC), a professional services company based in United Kingdom, received a lot of attention from a substantial price movement on the LSE in the over the last few months, increasing to £0.07 at one point, and dropping to the lows of £0.06. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Management Consulting Group’s current trading price of £0.06 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 Management Consulting Group’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 Management Consulting Group
Is Management Consulting Group still cheap?Great news for investors – Management Consulting Group is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is £0.95, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Management Consulting Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What kind of growth will Management Consulting Group generate?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 an expected decline of -10.44% in revenues over the next year, short term growth isn’t a driver for a buy decision for Management Consulting Group. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although MMC is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to MMC, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on MMC for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Management Consulting Group. You can find everything you need to know about Management Consulting Group in the latest infographic research report. If you are no longer interested in Management Consulting Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.