Should you consider buying Better Collective A/S (STO:BETCO) now?

Although Better Collective A/S (STO:BETCO) may not be the best-known stock right now, it has garnered a lot of attention due to a substantial price move on OM over the past few months, hitting 205kr at one point, and falling as low as 137kr. Certain movements in the stock price can give investors a better opportunity to get into the stock and potentially buy at a lower price. A question that needs to be answered is whether Better Collective’s current trading price of 137 kr reflects the true value of the small cap? Or is it currently undervalued, giving us the opportunity to buy? Let’s take a look at Better Collective’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 Better Collective

What is the opportunity in Better Collective?

The stock price looks reasonable at the moment based on my multiple price model, where I compare the company’s price-earnings ratio to the industry average. I used the price/earnings ratio in this case because there is not enough visibility to predict its cash flow. The stock ratio of 39.74x is currently trading slightly above its industry peers’ ratio of 34.84x, which means that if you buy Better Collective today, you would pay a relatively reasonable price for it. And if you think Better Collective should trade within this range, then there’s not much room for the stock price to rise above the levels of other industry peers over the long term. Although there may be an opportunity to buy in the future. This is because Better Collective’s beta (a measure of stock price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s stock will likely fall more than the rest of the market, providing an excellent buying opportunity.

What growth will Better Collective generate?

OM: BETCO Earnings and Revenue Growth March 7, 2022

Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to more than double over the next two years, the future looks bright for Better Collective. It seems that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.

What does this mean to you :

Are you a shareholder? BETCO’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 that we haven’t considered today, such as the background of its management team. Have these factors changed since the last time you consulted BETCO? Will you be confident enough to invest in the company if the price drops below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on BETCO, now might not be the best time to buy, given that it’s trading around industry price multiples. However, the optimistic outlook is encouraging for BETCO, which means it is worth digging deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to learn more about Better Collective as a business, it’s important to be aware of the risks it faces. Every business has risks, and we’ve spotted 4 warning signs for Better Collective you should know.

If you are no longer interested in Better Collective, you can use our free platform to view our list of over 50 other stocks with high growth potential.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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