Is It Time To Consider Buying CodeMill AB (publ) (STO:CDMIL)?

Simply Wall St · 10/17 04:19

CodeMill AB (publ) (STO:CDMIL), might not be a large cap stock, but it saw significant share price movement during recent months on the OM, rising to highs of kr19.40 and falling to the lows of kr13.60. 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 CodeMill's current trading price of kr13.70 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 CodeMill’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 CodeMill

Is CodeMill Still Cheap?

Great news for investors – CodeMill is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 27.37x is currently well-below the industry average of 38x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because CodeMill’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will CodeMill generate?

earnings-and-revenue-growth
OM:CDMIL Earnings and Revenue Growth October 17th 2024

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 CodeMill. 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 CDMIL is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit 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 CDMIL for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CDMIL. 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 investment decision.

So while earnings quality is important, it's equally important to consider the risks facing CodeMill at this point in time. You'd be interested to know, that we found 2 warning signs for CodeMill and you'll want to know about them.

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