Is Kenmare Resources plc (LSE:KMR) Undervalued?
Kenmare Resources plc (LSE:KMR), a metals and mining company based in Ireland, received a lot of attention from a substantial price increase on the LSE in the over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on KMR’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Kenmare Resources
Is KMR still cheap?
Good news, investors! KMR is still a bargain right now. My valuation model shows that the intrinsic value for the stock is £6.6, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that KMR’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of KMR look like?
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 profit growth of 5.54% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for KMR, at least in the short term.
What this means for you:
Are you a shareholder? Since KMR is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on KMR for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy KMR. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Kenmare Resources. You can find everything you need to know about KMR in the latest infographic research report. If you are no longer interested in Kenmare Resources, 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.
