Vincit Oyj (HEL:VINCIT), which is in the software business, and is based in Finland, received a lot of attention from a substantial price movement on the HLSE over the last few months, increasing to €5.50 at one point, and dropping to the lows of €3.01. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Vincit Oyj's current trading price of €3.22 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Vincit Oyj’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Vincit Oyj?
Great news for investors – Vincit Oyj is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 Vincit Oyj’s ratio of 40.25x is below its peer average of 46.89x, which indicates the stock is trading at a lower price compared to the Software industry. What’s more interesting is that, Vincit Oyj’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Vincit Oyj look like?
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. With revenues expected to grow by a double-digit 14% over the next couple of years, the outlook is positive for Vincit Oyj. If the level of expenses is able to be maintained, 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? Since VINCIT is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on VINCIT for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy VINCIT. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Vincit Oyj. You can find everything you need to know about Vincit Oyj in the latest infographic research report. If you are no longer interested in Vincit Oyj, 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 email@example.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.
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