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Profile Systems & Software A.E. (ATH:PROF), which is in the software business, and is based in Greece, saw a significant share price rise of over 20% in the past couple of months on the ATSE. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Profile Systems & Software A.E’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Profile Systems & Software A.E

What's the opportunity in Profile Systems & Software A.E?

The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 31.99x is currently trading in-line with its industry peers’ ratio, which means if you buy Profile Systems & Software A.E today, you’d be paying a relatively fair price for it. In addition to this, it seems like Profile Systems & Software A.E’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 the stock is less volatile than the wider market given its low beta.

What kind of growth will Profile Systems & Software A.E 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 more than double over the next couple of years, the future seems bright for Profile Systems & Software A.E. 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? PROF’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 PROF? 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 an eye on PROF, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for PROF, which means it’s worth diving deeper into 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 Profile Systems & Software A.E. You can find everything you need to know about Profile Systems & Software A.E in the latest infographic research report. If you are no longer interested in Profile Systems & Software A.E, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.