What Does FastPartner AB (publ)'s (STO:FPAR A) Share Price Indicate?

FastPartner AB (publ) (STO:FPAR A), is not the largest company out there, but it received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr146 at one point, and dropping to the lows of kr103. 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 FastPartner's current trading price of kr107 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at FastPartner’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 FastPartner

What's the opportunity in FastPartner?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that FastPartner’s ratio of 7.1x is trading slightly below its industry peers’ ratio of 10.79x, which means if you buy FastPartner today, you’d be paying a reasonable price for it. And if you believe that FastPartner should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like FastPartner’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will FastPartner 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. Though in the case of FastPartner, it is expected to deliver a highly negative earnings growth in the next few years, 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? FPAR A seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on FPAR A, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on FPAR A for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on FPAR A should the price fluctuate below the industry PE ratio.

So while earnings quality is important, it's equally important to consider the risks facing FastPartner at this point in time. Be aware that FastPartner is showing 4 warning signs in our investment analysis and 2 of those make us uncomfortable...

If you are no longer interested in FastPartner, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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.

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