What Does Portmeirion Group PLC's (LON:PMP) Share Price Indicate?

By
Simply Wall St
Published
February 25, 2022
AIM:PMP
Source: Shutterstock

While Portmeirion Group PLC (LON:PMP) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the AIM, rising to highs of UK£7.10 and falling to the lows of UK£5.70. 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 Portmeirion Group's current trading price of UK£5.70 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 Portmeirion Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Portmeirion Group

What is Portmeirion Group worth?

According to my valuation model, Portmeirion Group seems to be fairly priced at around 14% below my intrinsic value, which means if you buy Portmeirion Group today, you’d be paying a reasonable price for it. And if you believe the company’s true value is £6.60, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Portmeirion 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Portmeirion Group generate?

earnings-and-revenue-growth
AIM:PMP Earnings and Revenue Growth February 25th 2022

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. 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. Portmeirion Group's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in PMP’s positive outlook, 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on PMP, now may not be the most advantageous 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.

Diving deeper into the forecasts for Portmeirion Group mentioned earlier will help you understand how analysts view the stock going forward. Luckily, you can check out what analysts are forecasting by clicking here.

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

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.