At UK£4.95, Is Focusrite plc (LON:TUNE) Worth Looking At Closely?

Focusrite plc (LON:TUNE), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the AIM. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Focusrite’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Focusrite

What's The Opportunity In Focusrite?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.6% below my intrinsic value, which means if you buy Focusrite today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth £4.98, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Focusrite has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Focusrite?

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. However, with a relatively muted profit growth of 4.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Focusrite, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in TUNE’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 an eye on TUNE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Focusrite, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Focusrite (of which 1 is potentially serious!) you should know about.

If you are no longer interested in Focusrite, 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.