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Is There Now An Opportunity In Rosslyn Data Technologies plc (LON:RDT)?

Simply Wall St
·3 min read

Rosslyn Data Technologies plc (LON:RDT), is not the largest company out there, but it led the AIM gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Rosslyn Data Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Rosslyn Data Technologies

What's the opportunity in Rosslyn Data Technologies?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.79% above my intrinsic value, which means if you buy Rosslyn Data Technologies today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £0.06, there’s only an insignificant downside when the price falls to its real value. In addition to this, Rosslyn Data Technologies has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Rosslyn Data Technologies generate?

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 Rosslyn Data Technologies' case, its revenues over the next few years are expected to grow by 36%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? RDT’s optimistic future growth appears to have been factored into the current share price, 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on RDT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. When we did our research, we found 3 warning signs for Rosslyn Data Technologies (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

If you are no longer interested in Rosslyn Data Technologies, 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.