At £1.2825, Is It Time To Buy Ei Group plc (LSE:EIG)?
Ei Group plc (LSE:EIG), a hotels, restaurants and leisure company based in United Kingdom, received a lot of attention from a substantial price movement on the LSE in the over the last few months, increasing to £1.41 at one point, and dropping to the lows of £1.26. 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 EIG’s current trading price of £1.28 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 EIG’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 Ei Group
Is EIG still cheap?
Good news, investors! EIG is still a bargain right now. My valuation model shows that the intrinsic value for the stock is £1.7, but it is currently trading at £1.28 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, EIG’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because EIG’s stock is less volatile than the wider market given its low beta.
What kind of growth will EIG 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 EIG future expectations. EIG’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since EIG is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on EIG for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy EIG. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Ei Group. You can find everything you need to know about EIG in the latest infographic research report. If you are no longer interested in Ei Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.
