When Should You Buy James Cropper PLC (LON:CRPR)?

James Cropper PLC (LON:CRPR), is not the largest company out there, but it saw significant share price movement during recent months on the AIM, rising to highs of UK£14.00 and falling to the lows of UK£10.15. 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 James Cropper's current trading price of UK£11.00 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 James Cropper’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 James Cropper

What is James Cropper worth?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that James Cropper’s ratio of 32.96x is above its peer average of 19.77x, which suggests the stock is trading at a higher price compared to the Forestry industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that James Cropper’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of James Cropper look like?

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. With revenues expected to grow by a double-digit 22% over the next couple of years, the outlook is positive for James Cropper. 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? CRPR’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe CRPR should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on CRPR for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for CRPR, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into James Cropper, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with James Cropper, and understanding it should be part of your investment process.

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This article by Simply Wall St is general in nature. 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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