Is it time to consider buying GB Group plc (LON:GBG)?

While GB Group plc (LON:GBG) may not be the best-known stock right now, it has seen a double-digit share price rise of more than 10% in the past two months on AIM. With plenty of analysts covering the stock, we can expect any price-sensitive announcements to have already factored into the stock price. But what if there is still an opportunity to buy? Today, I will analyze the most recent GB Group outlook and valuation data to see if the opportunity still exists.

See our latest analysis for GB Group

What is the GB group worth?

GB Group is currently expensive based on my multiple price model, where I look at the company’s price-earnings ratio against 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 72.73x is currently well above the industry average of 50.38x, meaning it is trading at a higher price compared to its peers. On top of that, it looks like GB Group’s stock price is quite stable, which could mean two things: firstly, it may take a while for the stock price to come back to a range of attractive buy, and second, there may be less chance of buying low in the future once it reaches that value. This is because the stock is less volatile than the broader market given its low beta.

What does the future of GB Group look like?

earnings-and-revenue-growth

Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking to grow your portfolio. Buying a big company with solid prospects at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. GB Group’s earnings over the next few years are expected to double, indicating a very optimistic future. This should lead to higher cash flow, fueling higher share value.

What this means for you

Are you a shareholder? It looks like the market has well and truly priced in the positive outlook for GBG, with the stock trading above industry price multiples. At this current price, shareholders may ask a different question: should I sell? If you think GBG should be trading below its current price, selling at a high price and buying it back when its price falls towards the industry PE ratio can be profitable. But before making this decision, see if its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on GBG for a while, now might not be the best time to get into the stock. The price has outpaced its industry peers, which means there are likely to be no more benefits from poor pricing. However, the positive outlook is encouraging for GBG, which means it is worth digging into other factors in order to take advantage of the next price drop.

If you want to learn more about GB Group as a business, it is important to be aware of the risks it faces. You would be interested to know that we have found 3 warning signs for GB Group and you will want to know them.

If you are no longer interested in GB Group, you can use our free platform to see our list of more 50 other stocks with high growth potential.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

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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