Is Top Glove Corporation Bhd. (KLSE:TOPGLOV) Potentially Undervalued?

Top Glove Corporation Bhd. (KLSE:TOPGLOV), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the KLSE over the last few months, increasing to RM1.41 at one point, and dropping to the lows of RM0.84. 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 Top Glove Corporation Bhd's current trading price of RM0.84 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 Top Glove Corporation Bhd’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 Top Glove Corporation Bhd

What's The Opportunity In Top Glove Corporation Bhd?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 5.76% above our intrinsic value, which means if you buy Top Glove Corporation Bhd today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is MYR0.79, there’s only an insignificant downside when the price falls to its real value. What's more, Top Glove Corporation Bhd’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Top Glove Corporation Bhd 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 revenues expected to grow by 65% over the next couple of years, the future seems bright for Top Glove Corporation Bhd. 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? TOPGLOV’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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on TOPGLOV, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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. While conducting our analysis, we found that Top Glove Corporation Bhd has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Top Glove Corporation Bhd, 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.