Why FastPartner AB (publ) (STO:FPAR A) Could Be Worth Watching

FastPartner AB (publ) (STO:FPAR A), might not be a large cap stock, but it led the OM gainers with a relatively large price hike in the past couple of weeks. As a kr20b market-cap stock, it seems odd FastPartner is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s take a look at FastPartner’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for FastPartner

What is FastPartner worth?

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 11.42x is trading slightly above its industry peers’ ratio of 10.44x, which means if you buy FastPartner today, you’d be paying a relatively sensible price for it. And if you believe that FastPartner should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, it seems like FastPartner’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from FastPartner?

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 reduce the risk in your portfolio. Is your current exposure to the stock beneficial 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 tabs on FPAR A for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, 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. To help with this, we've discovered 4 warning signs (2 make us uncomfortable!) that you ought to be aware of before buying any shares in FastPartner.

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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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