Advanced Medical Solutions Group plc (AIM:AMS), a healthcare equipment and services company based in United Kingdom, received a lot of attention from a substantial price movement on the AIM in the over the last few months, increasing to £3.25 at one point, and dropping to the lows of £2.78. 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 AMS's current trading price of £2.87 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 AMS’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 AMS
Is AMS still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that AMS’s ratio of 34.6x is trading slightly below its industry peers’ ratio of 35.3x, which means if you buy AMS today, you’d be paying a reasonable price for it. And if you believe that AMS should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like AMS’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because AMS’s stock is less volatile than the wider market given its low beta.
What does the future of AMS 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.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 AMS future expectations. With profit expected to grow by 32.48% over the next couple of years, the future seems bright for AMS. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in AMS’s positive 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 AMS? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on AMS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for AMS, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Advanced Medical Solutions Group. You can find everything you need to know about AMS in the latest infographic research report. If you are no longer interested in Advanced Medical Solutions 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.