Is Now An Opportune Moment To Examine Pandox AB (publ) (STO:PNDX B)?

While Pandox AB (publ) (STO:PNDX B) might not be the most widely known stock at the moment, it led the OM gainers with a relatively large price hike in the past couple of weeks. As a kr27b market-cap stock, it seems odd Pandox is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Pandox’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Pandox

What's The Opportunity In Pandox?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.19x is currently trading slightly above its industry peers’ ratio of 5.58x, which means if you buy Pandox today, you’d be paying a relatively reasonable price for it. And if you believe that Pandox should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Although, there may be an opportunity to buy in the future. This is because Pandox’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Pandox?

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. 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 Pandox, at least in the near future.

What This Means For You

Are you a shareholder? Currently, PNDX B appears to be trading around industry price multiples, 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 PNDX B, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on PNDX B 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. 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 PNDX B should the price fluctuate below the industry PE ratio.

If you'd like to know more about Pandox as a business, it's important to be aware of any risks it's facing. For instance, we've identified 3 warning signs for Pandox (2 are a bit concerning) you should be familiar with.

If you are no longer interested in Pandox, 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.