Is Now The Time To Look At Buying Franchise Brands plc (LON:FRAN)?

While Franchise Brands plc (LON:FRAN) 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£2.45 and falling to the lows of UK£1.69. 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 Franchise Brands' current trading price of UK£1.69 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 Franchise Brands’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 Franchise Brands

Is Franchise Brands Still Cheap?

Good news, investors! Franchise Brands is still a bargain right now. My valuation model shows that the intrinsic value for the stock is £2.79, but it is currently trading at UK£1.69 on the share market, meaning that there is still an opportunity to buy now. Franchise Brands’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.

Can we expect growth from Franchise Brands?

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. In Franchise Brands' case, its revenues over the next few years are expected to grow by 97%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since FRAN is currently undervalued, 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 undervaluation.

Are you a potential investor? If you’ve been keeping an eye on FRAN for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FRAN. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Franchise Brands, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Franchise Brands (of which 1 doesn't sit too well with us!) you should know about.

If you are no longer interested in Franchise Brands, 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.