Servoca Plc (AIM:SVCA), a professional services company based in United Kingdom, maintained its current share price over the past couple of month on the AIM, with a relatively tight range of £0.22 to £0.24. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Servoca’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 Servoca
What is Servoca worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4% above my intrinsic value, which means if you buy Servoca today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £0.22, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Servoca’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Servoca look like?
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. Though in the case of Servoca, it is expected to deliver a relatively unexciting top-line growth of 8.49% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? Servoca’s future growth appears to have been factored into the current share price, 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 Servoca, 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.