Stock Analysis

Is QUIZ plc (LON:QUIZ) Potentially Undervalued?

  •  Updated
AIM:QUIZ
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QUIZ plc (LON:QUIZ), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the AIM. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on QUIZ’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for QUIZ

What's The Opportunity In QUIZ?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 QUIZ’s ratio of 7.57x is trading slightly below its industry peers’ ratio of 7.69x, which means if you buy QUIZ today, you’d be paying a reasonable price for it. And if you believe QUIZ should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since QUIZ’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.

What kind of growth will QUIZ generate?

earnings-and-revenue-growth
AIM:QUIZ Earnings and Revenue Growth September 25th 2022

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. 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 35% over the next couple of years, the future seems bright for QUIZ. 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? It seems like the market has already priced in QUIZ’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at QUIZ? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on QUIZ, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for QUIZ, 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - QUIZ has 4 warning signs we think you should be aware of.

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

Valuation is complex, but we're helping make it simple.

Find out whether QUIZ is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About AIM:QUIZ

QUIZ

QUIZ plc, through its subsidiaries, designs and retails clothes, footwear, and accessories under the QUIZ brand name.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation1
Future Growth1
Past Performance1
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Adequate balance sheet and overvalued.