As the ASX200 edges closer to its record high, buoyed by a general upswing in market sentiment, investors are increasingly turning their attention to small-cap stocks for potential opportunities. In this dynamic environment, identifying undervalued small caps with recent insider activity can be an intriguing strategy for those looking to navigate the complexities of Australia's evolving market landscape.
Top 10 Undervalued Small Caps With Insider Buying In Australia
Overview: Eagers Automotive is a leading automotive retail group in Australia, primarily engaged in car retailing, with a market cap of A$3.92 billion.
Operations: Car Retailing is the primary revenue stream, generating A$10.50 billion. The gross profit margin has shown fluctuations, reaching 19.14% in December 2022 and adjusting to 18.17% by October 2024. Operating expenses have been a significant cost factor, rising from A$1.16 billion in December 2022 to A$1.36 billion in October 2024, impacting net income margins which were last recorded at approximately 2.47%.
PE: 11.5x
Eagers Automotive, a small player in the Australian market, recently showcased their insights at the Morgans Conference on October 17, 2024. Despite a drop in net income to A$116 million for H1 2024 from A$137.76 million last year, sales rose to A$5.46 billion from A$4.82 billion. Insider confidence is evident as Nicholas Politis acquired 200,000 shares for approximately A$2.09 million recently. The company relies solely on external borrowing but maintains a solid financial position with debt covered by operating cash flow.
Overview: Mader Group operates in the staffing and outsourcing services sector, providing maintenance and support solutions to the mining and resources industry, with a market cap of A$1.02 billion.
Operations: The company's primary revenue stream comes from staffing and outsourcing services, with recent revenue reaching A$774.47 million. Cost of goods sold (COGS) was A$612.49 million, impacting the gross profit margin, which stood at 20.92%. Operating expenses were reported at A$89.97 million, while non-operating expenses amounted to A$21.60 million, contributing to a net income of A$50.42 million and a net income margin of 6.51%.
PE: 22.9x
Mader Group, a dynamic player in Australia, has been added to the S&P Global BMI Index as of September 2024, signaling increased visibility. Their fiscal 2025 guidance projects revenue reaching at least A$870 million and NPAT of A$57 million, reflecting growth expectations. The company declared a fully franked dividend increase by 34% for fiscal 2024. Despite relying solely on external borrowing for funding, insider confidence is evident with recent share purchases.
Overview: Magellan Financial Group is an Australian-based investment management firm specializing in global equities and infrastructure strategies, with a market capitalization of A$4.37 billion.
Operations: The company generates revenue primarily through investment management services, contributing A$279.83 million, followed by fund investments at A$81.65 million. The cost of goods sold (COGS) was A$72.77 million in the latest period, impacting the gross profit margin which stood at 80.78%. Operating expenses include general and administrative costs and sales & marketing expenses, with a significant non-operating expense of A$28.11 million recently reported.
PE: 8.4x
Magellan Financial Group, a smaller player in Australia's financial sector, recently reported an increase in net income to A$238.76 million for the year ending June 30, 2024, up from A$182.66 million the previous year. Despite revenue dropping to A$378.63 million from A$431.65 million, insider confidence is evident with recent share repurchases totaling 685,571 shares for A$5.19 million between July 2023 and June 2024. However, earnings are projected to decline by an average of 9.2% annually over the next three years due to reliance on higher-risk external borrowing and non-cash earnings quality factors influencing future growth prospects.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ASX:APE ASX:MAD and ASX:MFG.
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