FSA Group Limited (ASX:FSA), a consumer finance company based in Australia, received a lot of attention from a substantial price movement on the ASX in the over the last few months, increasing to A$1.62 at one point, and dropping to the lows of A$1.42. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether FSA Group’s current trading price of A$1.45 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 FSA 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 FSA Group
Is FSA Group still cheap?
According to my valuation model, FSA Group seems to be fairly priced at around 3% above my intrinsic value, which means if you buy FSA Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is A$1.41, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, it seems like FSA Group’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from FSA 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. 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. With profit expected to grow by a double-digit 11.70% in the upcoming year, the short-term outlook is positive for FSA Group. It looks like higher cash flows 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 FSA’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?