FDM Group (Holdings) plc (LON:FDM), is not the largest company out there, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£8.70 and falling to the lows of UK£7.33. 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 FDM Group (Holdings)'s current trading price of UK£7.95 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 FDM Group (Holdings)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for FDM Group (Holdings)

What's The Opportunity In FDM Group (Holdings)?

FDM Group (Holdings) appears to be overvalued by 23% at the moment, based on my discounted cash flow valuation. The stock is currently priced at UK£7.95 on the market compared to my intrinsic value of £6.49. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since FDM Group (Holdings)’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 kind of growth will FDM Group (Holdings) 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. With profit expected to grow by 33% over the next couple of years, the future seems bright for FDM Group (Holdings). 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? It seems like the market has well and truly priced in FDM’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe FDM should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on FDM for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for FDM, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 1 warning sign with FDM Group (Holdings), and understanding this should be part of your investment process.

If you are no longer interested in FDM Group (Holdings), you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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