Is Now The Time To Look At Buying Rosslyn Data Technologies plc (LON:RDT)?

Rosslyn Data Technologies plc (LON:RDT), 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£0.077 and falling to the lows of UK£0.061. 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 Rosslyn Data Technologies' current trading price of UK£0.061 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 Rosslyn Data Technologies’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 Rosslyn Data Technologies

Is Rosslyn Data Technologies still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.9% below my intrinsic value, which means if you buy Rosslyn Data Technologies today, you’d be paying a fair price for it. And if you believe the company’s true value is £0.06, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Rosslyn Data Technologies has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Rosslyn Data Technologies 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. 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. In Rosslyn Data Technologies' case, its revenues over the next few years are expected to grow by 36%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? RDT’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 an eye on RDT, 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.

So while earnings quality is important, it's equally important to consider the risks facing Rosslyn Data Technologies at this point in time. For example, we've found that Rosslyn Data Technologies has 3 warning signs (1 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

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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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