What Is Data#3 Limited’s (ASX:DTL) Share Price Doing?
Data#3 Limited (ASX:DTL), a it services company based in Australia, saw a double-digit share price rise of over 10% in the past couple of months on the ASX. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at DTL’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for Data#3
What's the opportunity in DTL?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5% below my intrinsic value, which means if you buy DTL today, you’d be paying a reasonable price for it. And if you believe DTL’s true value is $1.99, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like DTL’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 DTL’s stock is less volatile than the wider market given its low beta.
Can we expect growth from DTL?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. DTL’s earnings over the next few years are expected to increase by 26.17%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? DTL’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 DTL? 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 DTL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for DTL, 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 Data#3. You can find everything you need to know about DTL in the latest infographic research report. If you are no longer interested in Data#3, 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.
