Is Young & Co.'s Brewery, P.L.C. (LON:YNGA) Potentially Undervalued?
Young & Co.'s Brewery, P.L.C. (LON:YNGA), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the AIM. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Young's Brewery’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Young's Brewery
What's The Opportunity In Young's Brewery?
According to my valuation model, Young's Brewery seems to be fairly priced at around 13% below my intrinsic value, which means if you buy Young's Brewery today, you’d be paying a fair price for it. And if you believe that the stock is really worth £12.35, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Young's Brewery’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 does the future of Young's Brewery look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 9.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Young's Brewery, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in YNGA’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 YNGA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 1 warning sign for Young's Brewery and we think they deserve your attention.
If you are no longer interested in Young's Brewery, 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.
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