Should You Think About Buying Keywords Studios plc (LON:KWS) Now?

Keywords Studios plc (LON:KWS), 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£27.18 and falling to the lows of UK£20.90. 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 Keywords Studios' current trading price of UK£22.56 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Keywords Studios’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 Keywords Studios

Is Keywords Studios still cheap?

According to my valuation model, Keywords Studios seems to be fairly priced at around 19.97% above my intrinsic value, which means if you buy Keywords Studios today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £18.81, there’s only an insignificant downside when the price falls to its real value. What's more, Keywords Studios’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Keywords Studios?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 profit expected to more than double over the next couple of years, the future seems bright for Keywords Studios. 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 KWS’s positive outlook, with shares trading around its fair value. 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 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 KWS, 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.

It can be quite valuable to consider what analysts expect for Keywords Studios from their most recent forecasts. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Keywords Studios, 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.