Is It The Right Time To Buy Inchcape plc (LSE:INCH)?
Inchcape plc (LSE:INCH), a distributors company based in United Kingdom, received a lot of attention from a substantial price movement on the LSE in the over the last few months, increasing to £8.81 at one point, and dropping to the lows of £7.71. 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 INCH’s current trading price of £7.82 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at INCH’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Inchcape
What’s the opportunity in INCH?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16% below my intrinsic value, which means if you buy INCH today, you’d be paying a reasonable price for it. And if you believe that INCH is really worth £9.28, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like INCH’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 INCH’s stock is less volatile than the wider market given its low beta.
What kind of growth will INCH generate?
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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. INCH’s earnings over the next few years are expected to increase by 42.91%, 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? INCH’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 track record of its management team. Have these factors changed since the last time you looked at INCH? 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 an eye on INCH, 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 INCH, which means it’s worth further examining 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 Inchcape. You can find everything you need to know about INCH in the latest infographic research report. If you are no longer interested in Inchcape, 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.
