When Should You Buy DX (Group) plc (LON:DX.)?
DX (Group) plc (LON:DX.), is not the largest company out there, but it saw significant share price movement during recent months on the AIM, rising to highs of UK£0.36 and falling to the lows of UK£0.30. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether DX (Group)'s current trading price of UK£0.31 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 DX (Group)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for DX (Group)
Is DX (Group) still cheap?
According to my valuation model, DX (Group) seems to be fairly priced at around 16.77% above my intrinsic value, which means if you buy DX (Group) today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is £0.26, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because DX (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 DX (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. DX (Group)'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? DX.’s optimistic 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 an eye on DX., 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 the company, which 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.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 1 warning sign for DX (Group) you should know about.
If you are no longer interested in DX (Group), you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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.
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