Should You Investigate Nilörngruppen AB (STO:NIL B) At kr98.50?

While Nilörngruppen AB (STO:NIL B) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the OM. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Nilörngruppen’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Nilörngruppen

Is Nilörngruppen still cheap?

Great news for investors – Nilörngruppen is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is SEK151.00, but it is currently trading at kr98.50 on the share market, meaning that there is still an opportunity to buy now. However, given that Nilörngruppen’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 does the future of Nilörngruppen look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Though in the case of Nilörngruppen, it is expected to deliver a negative earnings growth of -9.3%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although NIL B is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to NIL B, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on NIL B for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So while earnings quality is important, it's equally important to consider the risks facing Nilörngruppen at this point in time. Every company has risks, and we've spotted 3 warning signs for Nilörngruppen (of which 1 doesn't sit too well with us!) you should know about.

If you are no longer interested in Nilörngruppen, 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.