Supply Network Limited (ASX:SNL), a retail distributors company based in Australia, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of A$3.14 to A$3.45. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Supply Network’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Supply Network
What is Supply Network worth?
The stock is currently trading at AU$3.25 on the share market, which means it is overvalued by 73% compared to my intrinsic value of A$1.88. Not the best news for investors looking to buy! In addition to this, it seems like Supply Network’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Supply Network 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. Though in the case of Supply Network, it is expected to deliver a relatively unexciting top-line growth of 9.67% over the next year, 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? SNL’s future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SNL should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on SNL for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.