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Is There Now An Opportunity In Adbri Limited (ASX:ABC)?

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·3 min read
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Adbri Limited (ASX:ABC), is not the largest company out there, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$3.59 and falling to the lows of AU$3.14. 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 Adbri's current trading price of AU$3.44 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 Adbri’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Adbri

What's the opportunity in Adbri?

Great news for investors – Adbri is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is A$5.27, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Adbri’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.

Can we expect growth from Adbri?

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

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. 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 grow by 28% over the next couple of years, the future seems bright for Adbri. 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? Since ABC 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 ABC 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 ABC. 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.

If you want to dive deeper into Adbri, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Adbri and you'll want to know about it.

If you are no longer interested in Adbri, 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 (at) simplywallst.com.