When Should You Buy Expleo Solutions Limited (NSE:EXPLEOSOL)?

Expleo Solutions Limited (NSE:EXPLEOSOL), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NSEI over the last few months, increasing to ₹1,681 at one point, and dropping to the lows of ₹1,203. 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 Expleo Solutions' current trading price of ₹1,221 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 Expleo Solutions’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 Expleo Solutions

Is Expleo Solutions still cheap?

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 23.21x is currently trading slightly below its industry peers’ ratio of 26.03x, which means if you buy Expleo Solutions today, you’d be paying a reasonable price for it. And if you believe that Expleo Solutions should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Expleo Solutions’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 kind of growth will Expleo Solutions 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. Expleo Solutions' earnings over the next few years are expected to increase by 47%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in EXPLEOSOL’s positive outlook, with shares trading around industry price multiples. 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 EXPLEOSOL? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on EXPLEOSOL, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for EXPLEOSOL, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Expleo Solutions as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Expleo Solutions you should be mindful of and 1 of these is potentially serious.

If you are no longer interested in Expleo Solutions, 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.