Redefine International PLC (LSE:RDI), a equity real estate investment trusts (reits) company based in United Kingdom, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of £0.37 to £0.4. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at RDI’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 Redefine International
What is RDI worth?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.2x is currently trading slightly below its industry peers’ ratio of 14.2x, which means if you buy RDI today, you’d be paying a fair price for it. And if you believe that RDI should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, RDI’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for RDI to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will RDI generate?
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 RDI future expectations. RDI’s earnings over the next few years are expected to increase by 33.70%, 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? RDI’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 RDI? 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 RDI, 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 RDI, 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 Redefine International. You can find everything you need to know about RDI in the latest infographic research report. If you are no longer interested in Redefine International, 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.