BMTC Group Inc (TSX:GBT), a specialty retail company based in Canada, received a lot of attention from a substantial price movement on the TSX in the over the last few months, increasing to CA$18.45 at one point, and dropping to the lows of CA$15.22. 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 BMTC Group’s current trading price of CA$15.57 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 BMTC Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for BMTC Group
What’s the opportunity in BMTC Group?
According to my valuation model, the stock is currently overvalued by about 43%, trading at CA$15.57 compared to my intrinsic value of CA$10.87. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that BMTC Group’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from BMTC Group?
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. 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. However, with a relatively muted revenue growth of 4.08% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for BMTC Group, at least in the short term.
What this means for you:
Are you a shareholder? GBT’s future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe GBT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on GBT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means 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 BMTC Group. You can find everything you need to know about BMTC Group in the latest infographic research report. If you are no longer interested in BMTC Group, 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.