Wagners Holding Company Limited (ASX :WGN) is now worth AU$0.82.

Wagners Holding Company LimitedASX:WGNWhile it isn’t the largest company in Australia, it experienced a subdued few weeks in terms price changes. It remained at AU$0.76-AU$0.83 for the most part. Is this really the value of the small-cap? Is it undervalued and allowing us to buy? Let’s take a look at Wagners Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Wagners Holding

What’s the Opportunity in Wagners Holdings?

According to my price multiple model Wagners Holding seems to be very expensive. This compares the company’s earnings to its price. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Wagners Holding’s ratio of 20.16x is above its peer average of 11.2x, which suggests the stock is trading at a higher price compared to the Basic Materials industry. However, does this mean that there is another chance to buy low? Since Wagners Holding’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is due in part to the high beta of Wagners Holding, which gives an indication of how the stock has moved relative to other stocks.

What kind of growth can Wagners Holding achieve?

If you are looking to increase your portfolio, it is worth considering the prospects of a company’s shares before investing in 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. Wagners Holding’s earnings are expected to rise by 94% over the next few year, which is a sign of a bright future. This will result in more stable cash flows and a higher share price.

What does this mean for you?

Are you a shareholder of the company? It seems like the market has well and truly priced in WGN’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? WGN trading below its current price can make it profitable. If so, you could sell high and buy it back up once its price falls to the industry PE ratio. Before you decide to sell, consider whether the fundamentals of WGN have changed.

Are you a potential investor? If you’ve been keeping an eye on WGN for a while, now may not be the best time to enter into the stock. The stock’s price has exceeded its industry peers. This means that there is unlikely to be any upside to mispricing. However, the optimistic prospect is encouraging for WGN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

This is why we don’t recommend investing in stock without fully understanding the risks. We know that every company is subject to risks. 1 warning sign for Wagners Holding These are the things you need to know.

Wagners Holding may not be for you. You can see our full list of alternatives on our free platform. 50 other stocks with a high growth potential.

Let us know what you think about this article. Have a question about the content? Get in touch Contact us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St has a general nature. Our commentary is based only on historical data and analyst projections. This analysis does not represent a recommendation to purchase or sell any stock and it does not consider your financial goals or financial situation. We strive to deliver long-term focused analysis that is based on fundamental data. Our analysis may not take into account the most recent price-sensitive company announcements and qualitative material. Simply Wall St holds no position in any of the stocks mentioned.

Participate in a Paid User Research Session
You’ll receive a Amazon Gift Card: US$30 Give us 1 hour of your time and help us create better investing tools for individual investors like you. Sign up here