At UK£0.69, Is It Time To Put Photo-Me International plc (LON:PHTM) On Your Watch List?

Photo-Me International plc (LON:PHTM), is not the largest company out there, but it saw a decent share price growth in the teens level on the LSE over the last few months. 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 Photo-Me International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Photo-Me International

What's the opportunity in Photo-Me International?

Good news, investors! Photo-Me International is still a bargain right now. According to my valuation, the intrinsic value for the stock is £0.93, but it is currently trading at UK£0.69 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Photo-Me International’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Photo-Me International 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 a relatively muted profit growth of 8.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Photo-Me International, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since PHTM is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on PHTM for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PHTM. 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 buy.

So while earnings quality is important, it's equally important to consider the risks facing Photo-Me International at this point in time. While conducting our analysis, we found that Photo-Me International has 1 warning sign and it would be unwise to ignore this.

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

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.

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