PRGX Global Inc (NASDAQ:PRGX), a it company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $7.95 and falling to the lows of $7.05. 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 PRGX Global’s current trading price of $7.65 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 PRGX Global’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 PRGX Global
Is PRGX Global still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 3.19x is currently trading slightly below its industry peers’ ratio of 3.97x, which means if you buy PRGX Global today, you’d be paying a relatively fair price for it. And if you believe that PRGX Global should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since PRGX Global’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of PRGX Global look like?
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. However, with a relatively muted revenue growth of 8.19% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for PRGX Global.
What this means for you:
Are you a shareholder? It seems like the market has already priced in PRGX’s growth outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at PRGX? 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 PRGX, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive growth outlook may mean it’s worth diving deeper into other factors 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 PRGX Global. You can find everything you need to know about PRGX Global in the latest infographic research report. If you are no longer interested in PRGX Global, 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.