Michael Hill International Limited (ASX:MHJ), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$0.80 at one point, and dropping to the lows of AU$0.47. 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 Michael Hill International's current trading price of AU$0.47 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 Michael Hill International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Michael Hill International

What Is Michael Hill International Worth?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.06x is currently trading slightly above its industry peers’ ratio of 13.82x, which means if you buy Michael Hill International today, you’d be paying a relatively reasonable price for it. And if you believe that Michael Hill International should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, Michael Hill International’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Michael Hill International?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Michael Hill International's earnings over the next few years are expected to increase by 53%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? MHJ’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 financial strength of the company. Have these factors changed since the last time you looked at MHJ? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?