Yahoo Finance Is Park Lawn Corporation (TSE:PLC) Potentially Undervalued?
Park Lawn Corporation (TSE:PLC), is not the largest company out there, but it received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$39.14 at one point, and dropping to the lows of CA$31.73. 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 Park Lawn's current trading price of CA$32.48 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 Park Lawn’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Park Lawn
What's the opportunity in Park Lawn?
Good news, investors! Park Lawn is still a bargain right now. My valuation model shows that the intrinsic value for the stock is CA$52.38, but it is currently trading at CA$32.48 on the share market, meaning that there is still an opportunity to buy now. However, given that Park Lawn’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Park Lawn?
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. In Park Lawn's case, its revenues over the next few years are expected to grow by 46%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since PLC is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive 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 undervaluation.
Are you a potential investor? If you’ve been keeping an eye on PLC for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PLC. 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 buy.
If you'd like to know more about Park Lawn as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Park Lawn you should know about.
If you are no longer interested in Park Lawn, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
