At UK£0.056, Is Kromek Group plc (LON:KMK) Worth Looking At Closely?

Kromek Group plc (LON:KMK), might not be a large cap stock, but it saw significant share price movement during recent months on the AIM, rising to highs of UK£0.075 and falling to the lows of UK£0.053. 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 Kromek Group's current trading price of UK£0.056 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 Kromek Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Kromek Group

What Is Kromek Group Worth?

Kromek Group appears to be overvalued by 21% at the moment, based on our discounted cash flow valuation. The stock is currently priced at UK£0.056 on the market compared to our intrinsic value of £0.05. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Kromek Group’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Kromek Group look like?

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. However, with a negative profit growth of -3.2% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Kromek Group. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? If you believe KMK is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 tabs on KMK for some time, now may not be the best time to enter into the stock. The company’s price has climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 5 warning signs for Kromek Group and you'll want to know about them.

If you are no longer interested in Kromek Group, 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.