Is There Now An Opportunity In mPLUS Corp. (KOSDAQ:259630)?

While mPLUS Corp. (KOSDAQ:259630) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the KOSDAQ, rising to highs of ₩17,500 and falling to the lows of ₩12,450. 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 mPLUS' current trading price of ₩12,800 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 mPLUS’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 mPLUS

Is mPLUS still cheap?

mPLUS is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison 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 41.47x is currently well-above the industry average of 22.07x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that mPLUS’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will mPLUS generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With revenues expected to grow by 55% over the next couple of years, the future seems bright for mPLUS. If the level of expenses is able to be maintained, 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? It seems like the market has well and truly priced in A259630’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe A259630 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on A259630 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for A259630, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into mPLUS, you'd also look into what risks it is currently facing. Be aware that mPLUS is showing 4 warning signs in our investment analysis and 2 of those are a bit concerning...

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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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