FastPartner AB (publ) (OM:FPAR), a real estate company based in Sweden, received a lot of attention from a substantial price movement on the OM over the last few months, increasing to SEK154 at one point, and dropping to the lows of SEK139. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether FastPartner’s current trading price of SEK151 reflective of the actual value of the small-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. Check out our latest analysis for FastPartner
What’s the opportunity in FastPartner?According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that FastPartner’s ratio of 6.84x is trading slightly below its industry peers’ ratio of 7.28x, which means if you buy FastPartner today, you’d be paying a reasonable price for it. And if you believe FastPartner should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. 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 fairly valued. 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. 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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for FastPartner, at least in the near future.
What this means for you:
Are you a shareholder? FPAR seems fairly priced 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 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, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on FPAR for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which 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 gel your views on FPAR should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on FastPartner. You can find everything you need to know about FastPartner in the latest infographic research report. If you are no longer interested in FastPartner, you can use our free platform to see my list of over 50 other stocks with a high growth potential.