Yahoo Finance Is It Time To Consider Buying Australian Finance Group Limited (ASX:AFG)?
Australian Finance Group Limited (ASX:AFG), operating in the financial services industry based in Australia, led the ASX gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Australian Finance Group’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Australian Finance Group
What is Australian Finance Group worth?
Good news, investors! Australian Finance Group is still a bargain right now. According to my valuation, the intrinsic value for the stock is A$2.40, but it is currently trading at AU$1.54 on the share market, meaning that there is still an opportunity to buy now. However, given that Australian Finance Group’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 Australian Finance Group?
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. However, with a negative profit growth of -0.07% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Australian Finance Group. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although AFG is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to AFG, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on AFG for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Australian Finance Group. You can find everything you need to know about Australian Finance Group in the latest infographic research report. If you are no longer interested in Australian Finance Group, you can use our free platform to see my 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. 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. Thank you for reading.
