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Is Now The Time To Look At Buying Ainsworth Game Technology Limited (ASX:AGI)?

Simply Wall St

Ainsworth Game Technology Limited (ASX:AGI), which is in the hospitality business, and is based in Australia, saw a decent share price growth in the teens level on the ASX 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? Let’s examine Ainsworth Game Technology’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Ainsworth Game Technology

What's the opportunity in Ainsworth Game Technology?

According to my relative valuation model, the stock seems to be currently fairly priced. 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 Ainsworth Game Technology’s ratio of 23.22x is trading in-line with its industry peers’ ratio, which means if you buy Ainsworth Game Technology today, you’d be paying a relatively fair price for it. In addition to this, it seems like Ainsworth Game Technology’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Ainsworth Game Technology generate?

ASX:AGI Past and Future Earnings, January 5th 2020

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. With profit expected to grow by 26% over the next couple of years, the future seems bright for Ainsworth Game Technology. 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? It seems like the market has already priced in AGI’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 AGI? 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 AGI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for AGI, 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 Ainsworth Game Technology. You can find everything you need to know about Ainsworth Game Technology in the latest infographic research report. If you are no longer interested in Ainsworth Game Technology, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.