Why CTT Systems AB (publ) (STO:CTT) Could Be Worth Watching

CTT Systems AB (publ) (STO:CTT), is not the largest company out there, but it saw significant share price movement during recent months on the OM, rising to highs of kr245 and falling to the lows of kr173. 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 CTT Systems' current trading price of kr173 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 CTT Systems’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 CTT Systems

What is CTT Systems worth?

According to my valuation model, CTT Systems seems to be fairly priced at around 17% below my intrinsic value, which means if you buy CTT Systems today, you’d be paying a reasonable price for it. And if you believe the company’s true value is SEK209.52, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because CTT Systems’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will CTT Systems 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 profit expected to more than double over the next couple of years, the future seems bright for CTT Systems. 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? CTT’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on CTT, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining 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 CTT Systems 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 CTT Systems you should be aware of.

If you are no longer interested in CTT Systems, 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.