When Should You Buy Alimak Group AB (publ) (STO:ALIG)?

By
Simply Wall St
Published
May 23, 2021
OM:ALIG
Source: Shutterstock

Alimak Group AB (publ) (STO:ALIG), might not be a large cap stock, but it saw significant share price movement during recent months on the OM, rising to highs of kr152 and falling to the lows of kr131. 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 Alimak Group's current trading price of kr143 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 Alimak Group’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 Alimak Group

Is Alimak Group still cheap?

Great news for investors – Alimak Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is SEK186.03, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Alimak Group’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.

Can we expect growth from Alimak Group?

earnings-and-revenue-growth
OM:ALIG Earnings and Revenue Growth May 24th 2021

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. Alimak Group'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 ALIG is currently undervalued, 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 capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on ALIG for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ALIG. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

If you want to dive deeper into Alimak Group, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Alimak Group and we think they deserve your attention.

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