Is It Time To Consider Buying InfraCom Group AB (publ) (NGM:INFRA)?

While InfraCom Group AB (publ) (NGM:INFRA) might not have the largest market cap around , it saw a decent share price growth of 14% on the NGM over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. Less-covered, small caps sees 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 take a look at InfraCom Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for InfraCom Group

What's The Opportunity In InfraCom Group?

According to our valuation model, InfraCom Group seems to be fairly priced at around 18% below our intrinsic value, which means if you buy InfraCom Group today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth SEK19.85, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because InfraCom Group’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.

What kind of growth will InfraCom Group generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 InfraCom Group, it is expected to deliver a relatively unexciting top-line growth of 2.1% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? INFRA’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on INFRA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've found that InfraCom Group has 4 warning signs (1 is a bit concerning!) that deserve your attention before going any further with your analysis.

If you are no longer interested in InfraCom Group, 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.