GP Strategies Corporation (NYSE:GPX), which is in the professional services business, and is based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $19.4 and falling to the lows of $14.04. 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 GP Strategies’s current trading price of $14.12 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 GP Strategies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is GP Strategies still cheap?According to my relative valuation model, the stock seems to be currently fairly priced. 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 25.74x is currently trading slightly above its industry peers’ ratio of 23.05x, which means if you buy GP Strategies today, you’d be paying a relatively fair price for it. And if you believe that GP Strategies should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Furthermore, it seems like GP Strategies’s share price is quite stable, which means 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 GP Strategies?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. With profit expected to more than double in the upcoming, the future appears to be extremely bright for GP Strategies. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in GPX’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at GPX? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on GPX, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for GPX, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on GP Strategies. You can find everything you need to know about GP Strategies in the latest infographic research report. If you are no longer interested in GP Strategies, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.