What Does Nilörngruppen AB's (STO:NIL B) Share Price Indicate?

Nilörngruppen AB (STO:NIL B), might not be a large cap stock, but 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

What's the opportunity in Nilörngruppen?

Great news for investors – Nilörngruppen is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is SEK116.96, but it is currently trading at kr73.10 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Nilörngruppen’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Nilörngruppen?

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. However, with a negative profit growth of -11% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Nilörngruppen. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although NIL B is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher 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 an eye on NIL B for a while, but hesitant on making the leap, I recommend you research further 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. When we did our research, we found 3 warning signs for Nilörngruppen (1 shouldn't be ignored!) that we believe deserve your full attention.

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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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