Should You Think About Buying ISDN Holdings Limited (SGX:I07) Now?
ISDN Holdings Limited (SGX:I07), which is in the electrical business, and is based in Singapore, received a lot of attention from a substantial price movement on the SGX over the last few months, increasing to S$0.23 at one point, and dropping to the lows of S$0.20. 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 ISDN Holdings's current trading price of S$0.22 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 ISDN 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 ISDN Holdings
What is ISDN Holdings worth?
The stock seems fairly valued at the moment according to my relative valuation model. 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 ISDN Holdings’s ratio of 15.53x is trading slightly below its industry peers’ ratio of 18.07x, which means if you buy ISDN Holdings today, you’d be paying a fair price for it. And if you believe that ISDN Holdings should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that ISDN Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from ISDN Holdings?
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 profit expected to more than double over the next couple of years, the future seems bright for ISDN 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 already priced in I07’s positive outlook, 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 I07? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping tabs on I07, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for I07, 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 ISDN Holdings. You can find everything you need to know about ISDN Holdings in the latest infographic research report. If you are no longer interested in ISDN Holdings, 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 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.
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. Thank you for reading.
