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While System1 Group PLC (LON:SYS1) might not have the largest market cap around , it maintained its current share price over the past couple of month on the AIM, with a relatively tight range of UK£5.90 to UK£6.35. 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 System1 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 System1 Group
Is System1 Group Still Cheap?
According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that System1 Group’s ratio of 23.86x is above its peer average of 16.15x, which suggests the stock is trading at a higher price compared to the Media industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since System1 Group’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 based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will System1 Group generate?
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 19% in the upcoming year, the outlook is positive for System1 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? SYS1’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe SYS1 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.