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Black Diamond Group Limited (TSE:BDI), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$9.20 and falling to the lows of CA$7.76. 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 Black Diamond Group's current trading price of CA$8.08 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 Black Diamond Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
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What's The Opportunity In Black Diamond Group?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Black Diamond Group’s ratio of 19.31x is trading slightly below its industry peers’ ratio of 23.26x, which means if you buy Black Diamond Group today, you’d be paying a decent price for it. And if you believe that Black Diamond Group should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. So, is there another chance to buy low in the future? Given that Black Diamond 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.
See our latest analysis for Black Diamond Group
What kind of growth will Black Diamond Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Black Diamond Group's earnings over the next few years are expected to increase by 47%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.