3 ASX Stocks That May Be Trading Below Their Estimated Value
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Over the last 7 days, the Australian market has dropped 2.2%, but it has risen by 5.2% over the past year, with earnings forecast to grow by 13% annually. In this fluctuating environment, identifying stocks that may be trading below their estimated value can present opportunities for investors seeking potential growth and stability.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| LaserBond (ASX:LBL) | A$0.70 | A$1.37 | 48.9% |
| Elders (ASX:ELD) | A$9.28 | A$18.11 | 48.8% |
| Telix Pharmaceuticals (ASX:TLX) | A$17.99 | A$33.20 | 45.8% |
| Regal Partners (ASX:RPL) | A$3.28 | A$6.39 | 48.6% |
| Nanosonics (ASX:NAN) | A$2.98 | A$5.82 | 48.8% |
| Domino's Pizza Enterprises (ASX:DMP) | A$31.72 | A$63.35 | 49.9% |
| Infomedia (ASX:IFM) | A$1.65 | A$3.06 | 46% |
| Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
| Little Green Pharma (ASX:LGP) | A$0.091 | A$0.17 | 46.3% |
| Airtasker (ASX:ART) | A$0.28 | A$0.52 | 46.5% |
Let's explore several standout options from the results in the screener.
Domino's Pizza Enterprises
Overview: Domino's Pizza Enterprises Limited operates retail food outlets and has a market cap of A$2.88 billion.
Operations: The company's revenue from restaurants amounts to A$2.48 billion.
Estimated Discount To Fair Value: 49.9%
Domino's Pizza Enterprises is trading at A$31.72, significantly below its estimated fair value of A$63.35, indicating it may be undervalued based on cash flows. Despite a high debt level and recent shareholder dilution, the company’s earnings are forecast to grow 26.84% annually over the next three years, outpacing the broader Australian market's growth rate of 12.7%. However, profit margins have decreased from 6.7% to 2.2%, and revenue growth is expected to lag behind market averages at 4.5% per year.
Elders
Overview: Elders Limited, with a market cap of A$1.47 billion, provides agricultural products and services to rural and regional customers primarily in Australia.
Operations: Elders generates revenue through its Branch Network (A$2.54 billion), Wholesale Products (A$341.19 million), and Feed and Processing Services (A$120.14 million).
Estimated Discount To Fair Value: 48.8%
Elders Limited, trading at A$9.28, is significantly undervalued with an estimated fair value of A$18.11. Despite a high level of debt and declining profit margins (2.1% vs 3.4% last year), earnings are forecast to grow 22.8% annually, outpacing the Australian market's growth rate of 12.7%. Recent reaffirmation of earnings guidance for fiscal year 2024 supports underlying EBIT between A$120 million to A$140 million, highlighting strong cash flow potential amidst current valuation discrepancies.