The Gym Group plc (LON:GYM), might not be a large cap stock, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£1.64 and falling to the lows of UK£1.34. 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 Gym Group's current trading price of UK£1.36 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 Gym Group’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 Gym Group

What's The Opportunity In Gym Group?

According to our valuation model, Gym Group seems to be fairly priced at around 16.65% above our intrinsic value, which means if you buy Gym Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £1.17, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Gym 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Gym Group?

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. 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. With revenues expected to grow by a double-digit 18% over the next couple of years, the outlook is positive for Gym Group. 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? It seems like the market has already priced in GYM’s positive 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 tabs on GYM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which 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.