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Is Now An Opportune Moment To Examine Gage Roads Brewing Co. Limited (ASX:GRB)?

Simply Wall St

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Gage Roads Brewing Co. Limited (ASX:GRB), might not be a large cap stock, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$0.066 and falling to the lows of AU$0.047. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Gage Roads Brewing's current trading price of AU$0.047 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 Gage Roads Brewing’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 Gage Roads Brewing

Is Gage Roads Brewing still cheap?

Gage Roads Brewing appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. 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 Gage Roads Brewing’s ratio of 51.71x is above its peer average of 22.24x, which suggests the stock is trading at a higher price compared to the Beverage industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Gage Roads Brewing’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Gage Roads Brewing look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. In the upcoming year, Gage Roads Brewing’s earnings are expected to increase by 93%, 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? GRB’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe GRB should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 GRB for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for GRB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To help with this, we've discovered 5 warning signs (1 doesn't sit too well with us!) that you ought to be aware of before buying any shares in Gage Roads Brewing.

If you are no longer interested in Gage Roads Brewing, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.