Is XLMedia PLC (AIM:XLM) Undervalued?
XLMedia PLC (AIM:XLM), a internet software and services company based in Channel Islands, received a lot of attention from a substantial price increase on the AIM in the over the last few months. Less covered, small-stocks like XLM 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 XLM still be trading at a low price relative to its actual value? Let’s examine XLM’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for XLMedia
What's the opportunity in XLM?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy XLM today, you’d be paying a reasonable price for it. And if you believe that XLM is really worth $1.85, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like XLM’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 XLM’s stock is less volatile than the wider market given its low beta.
Can we expect growth from XLM?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. XLM’s earnings over the next few years are expected to increase by 34.13%, 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? XLM’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 XLM? 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 XLM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for XLM, 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 XLMedia. You can find everything you need to know about XLM in the latest infographic research report. If you are no longer interested in XLMedia, 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.
