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What Does Beijer Electronics Group AB (publ)'s (STO:BELE) Share Price Indicate?

Simply Wall St

Beijer Electronics Group AB (publ) (STO:BELE), which is in the electronic business, and is based in Sweden, saw a significant share price rise of over 20% in the past couple of months on the OM. 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 examine Beijer Electronics Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Beijer Electronics Group

What's the opportunity in Beijer Electronics Group?

The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Beijer Electronics Group’s ratio of 25.09x is trading slightly above its industry peers’ ratio of 23.12x, which means if you buy Beijer Electronics Group today, you’d be paying a relatively reasonable price for it. And if you believe that Beijer Electronics Group should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Beijer Electronics Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Beijer Electronics Group?

OM:BELE Past and Future Earnings, December 4th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 over the next couple of years, the future seems bright for Beijer Electronics Group. 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 BELE’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 track record of its management team. Have these factors changed since the last time you looked at BELE? 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 BELE, 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 BELE, 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 Beijer Electronics Group. You can find everything you need to know about Beijer Electronics Group in the latest infographic research report. If you are no longer interested in Beijer Electronics Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.