Is It Time To Consider Buying Kainos Group plc (LON:KNOS)?

Kainos Group plc (LON:KNOS), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the LSE over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Kainos Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Kainos Group

What's The Opportunity In Kainos Group?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19.41% above my intrinsic value, which means if you buy Kainos Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth £10.93, there’s only an insignificant downside when the price falls to its real value. In addition to this, Kainos Group has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Kainos Group generate?

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 profit expected to grow by 60% over the next couple of years, the future seems bright for Kainos Group. 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? KNOS’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on KNOS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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 Kainos Group from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Kainos 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.