While AD Plastik d.d. (ZGSE:ADPL) might not be the most widely known stock at the moment, it had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of Kn177 to Kn187. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at AD Plastik d.d’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 AD Plastik d.d
Is AD Plastik d.d still cheap?
Good news, investors! AD Plastik d.d is still a bargain right now according to my price multiple model, which compares 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 16.11x is currently well-below the industry average of 23.28x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that AD Plastik d.d’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from AD Plastik d.d?
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. AD Plastik d.d's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since ADPL is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on ADPL for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ADPL. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.
So while earnings quality is important, it's equally important to consider the risks facing AD Plastik d.d at this point in time. At Simply Wall St, we found 3 warning signs for AD Plastik d.d and we think they deserve your attention.
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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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About ZGSE:ADPL
AD Plastik d.d
Develops, produces, and sells interior and exterior automotive components in Slovenia, Romania, Russia, France, Hungary, Italy, the United Kingdom, Germany, Spain, Slovakia, Croatia, Poland, the Czech Republic, and internationally.
Low and slightly overvalued.
