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C&C Group plc (LON:CCR), is not the largest company out there, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£1.45 and falling to the lows of UK£1.30. 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 C&C Group's current trading price of UK£1.42 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 C&C 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 C&C Group
What Is C&C Group Worth?
According to my 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, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that C&C Group’s ratio of 23.3x is trading in-line with its industry peers’ ratio, which means if you buy C&C Group today, you’d be paying a relatively reasonable price for it. Is there another opportunity to buy low in the future? Since C&C Group’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.
Can we expect growth from C&C 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 more than double over the next couple of years, the future seems bright for C&C Group. 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? CCR’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 CCR? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?