Undervalued companies are those that trade at a price lower than their actual values, such as Parity Group and Billington Holdings. There’s a few ways you can determine how much a company is actually worth. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
Parity Group plc (AIM:PTY)
Parity Group plc, together with its subsidiaries, provides a range of recruitment, and business and technology solutions to clients in the public and private sectors in the United Kingdom. Started in 1993, and now run by Alan Rommel, the company employs 112 people and has a market cap of GBP £8.93M, putting it in the small-cap category.
PTY’s stock is currently trading at -71% below its value of £0.3, at a price tag of £0.09, according to my discounted cash flow model. This mismatch indicates a chance to invest in PTY at a discounted price. Additionally, PTY’s PE ratio is trading at around 7x against its its it services peer level of 25x, indicating that relative to its comparable set of companies, you can buy PTY for a cheaper price. PTY is also robust in terms of financial health, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 100%, which has been diminishing for the past few years signifying its capacity to reduce its debt obligations year on year.
Billington Holdings Plc (AIM:BILN)
Billington Holdings Plc, through its subsidiaries, designs, manufactures, and installs structural steelworks in the United Kingdom and rest of Europe. Founded in 1989, and currently headed by CEO Mark Smith, the company currently employs 361 people and with the stock’s market cap sitting at GBP £32.71M, it comes under the small-cap category.
BILN’s shares are currently floating at around -49% less than its actual level of £5.33, at a price of £2.72, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Moreover, BILN’s PE ratio stands at 9.5x against its its construction and engineering peer level of 13x, indicating that relative to its comparable company group, BILN’s stock can be bought at a cheaper price. BILN is also strong financially, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 12%, which has over the past couple of years signifying its capability
Empresaria Group plc (AIM:EMR)
Empresaria Group plc provides staffing and recruitment services in the United Kingdom, Continental Europe, the Asia Pacific, and the Americas. Established in 1996, and currently lead by Joost Kreulen, the company size now stands at 1,372 people and with the company’s market cap sitting at GBP £64.46M, it falls under the small-cap group.
EMR’s shares are now hovering at around -70% under its true level of £4.44, at a price of £1.32, based on my discounted cash flow model. The divergence signals an opportunity to buy EMR shares at a low price. What’s even more appeal is that EMR’s PE ratio stands at 12.7x against its its professional services peer level of 17x, indicating that relative to its comparable set of companies, EMR’s stock can be bought at a cheaper price. EMR is also a financially robust company, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 65% has for the past few years showing EMR’s ability
For more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our interactive list of undervalued stocks.
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.