Is There Now An Opportunity In Young & Co.'s Brewery, P.L.C. (LON:YNGA)?

By
Simply Wall St
Published
December 10, 2021
AIM:YNGA
Source: Shutterstock

While Young & Co.'s Brewery, P.L.C. (LON:YNGA) 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£16.30 and falling to the lows of UK£14.30. 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 Young's Brewery's current trading price of UK£15.65 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 Young's Brewery’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 Young's Brewery

What's the opportunity in Young's Brewery?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11.50% above my intrinsic value, which means if you buy Young's Brewery today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £14.04, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Young's Brewery’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

Can we expect growth from Young's Brewery?

earnings-and-revenue-growth
AIM:YNGA Earnings and Revenue Growth December 10th 2021

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. With revenues expected to grow by 87% over the next couple of years, the future seems bright for Young's Brewery. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? YNGA’s optimistic future growth appears to have been factored into the current share price, 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 tabs on YNGA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Young's Brewery has 1 warning sign we think you should be aware of.

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

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