Is Admie Holding S.A. (ATH:ADMIE) Potentially Undervalued?

While Admie Holding S.A. (ATH:ADMIE) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the ATSE over the last few months. As a small cap stock, which tends to lack high analyst coverage, 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? Let’s take a look at Admie Holding’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Admie Holding

What is Admie Holding worth?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 12.15x is currently trading slightly below its industry peers’ ratio of 12.41x, which means if you buy Admie Holding today, you’d be paying a reasonable price for it. And if you believe Admie Holding 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. Furthermore, Admie Holding’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of Admie Holding 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. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Admie Holding. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Currently, ADMIE appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on ADMIE, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ADMIE for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on ADMIE should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Admie Holding, you'd also look into what risks it is currently facing. Be aware that Admie Holding is showing 2 warning signs in our investment analysis and 1 of those can't be ignored...

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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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