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Is It Time To Consider Buying Next Fifteen Communications Group plc (LON:NFC)?

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Simply Wall St
·4 min read
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Next Fifteen Communications Group plc (LON:NFC), might not be a large cap stock, but it led the AIM gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps sees 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 Next Fifteen Communications Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Next Fifteen Communications Group

Is Next Fifteen Communications Group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.2% below my intrinsic value, which means if you buy Next Fifteen Communications Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth £6.28, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Next Fifteen Communications Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Next Fifteen Communications Group?

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. Though in the case of Next Fifteen Communications Group, it is expected to deliver a relatively unexciting top-line growth of 2.7% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in NFC’s future outlook, 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 the stock? 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 NFC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

If you'd like to know more about Next Fifteen Communications Group as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Next Fifteen Communications Group has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in Next Fifteen Communications Group, 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.