While Polygiene AB (publ.) (STO:POLYG) 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? Let’s examine Polygiene AB (publ.)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Polygiene AB (publ.) worth?
According to my valuation model, Polygiene AB (publ.) seems to be fairly priced at around 18% below my intrinsic value, which means if you buy Polygiene AB (publ.) today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth SEK51.29, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Polygiene AB (publ.)’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.
What kind of growth will Polygiene AB (publ.) generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Polygiene AB (publ.)'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? It seems like the market has already priced in POLYG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on POLYG, now may not be the most optimal 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Polygiene AB (publ.) at this point in time. You'd be interested to know, that we found 2 warning signs for Polygiene AB (publ.) and you'll want to know about these.
If you are no longer interested in Polygiene AB (publ.), 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.
Polygiene Group AB develops, manufactures, and sells antimicrobial solutions for textiles and other surfaces in the Asia Pacific, Europe, the Middle East, Africa, the Americas, and internationally.
Flawless balance sheet and good value.