The Australian market has remained flat over the past week but is up 11% over the past year, with earnings forecasted to grow by 12% annually. In this context, identifying undervalued small-cap stocks with insider activity can provide unique opportunities for investors looking to capitalize on potential growth.
Top 10 Undervalued Small Caps With Insider Buying In Australia
Overview: Eagers Automotive operates primarily in car retailing with additional activities in property, having a market cap of approximately A$3.38 billion.
Operations: The company's revenue primarily comes from car retailing, which generated A$10.50 billion. For the period ending September 30, 2023, it reported a gross profit margin of 18.79%.
PE: 10.7x
Eagers Automotive, a small cap in Australia, reported A$5.46 billion in sales for H1 2024, up from A$4.82 billion last year. However, net income dropped to A$116 million from A$137.76 million. Despite this dip, insider confidence is evident with recent share repurchases authorized by the board and ongoing buyback programs targeting up to 10% of issued shares until June 2025. The company also announced a dividend of A$0.24 per share payable on September 20, 2024.
Overview: Codan is a technology company specializing in communications and metal detection equipment, with a market cap of A$1.32 billion.
Operations: The company generates revenue primarily from Communications (A$326.91 million) and Metal Detection (A$219.85 million). The gross profit margin has seen fluctuations, with the most recent quarter at 54.42%. Operating expenses include significant allocations to Sales & Marketing and R&D, which were A$106.68 million and A$35.98 million respectively in the latest period.
PE: 34.3x
Codan Limited's recent earnings report for the year ending June 30, 2024, showed sales of A$550.46 million, up from A$456.5 million the previous year. Net income increased to A$81.39 million from A$67.7 million, reflecting a solid financial performance with basic earnings per share rising to A$0.45 from A$0.375. Insider confidence is evident with significant share purchases over the past six months, indicating strong belief in future growth prospects despite reliance on external borrowing for funding.
Overview: Elders operates in the agribusiness sector, providing services and products through its branch network, wholesale products division, and feed and processing services, with a market cap of A$1.87 billion.
Operations: The company's revenue streams primarily come from its Branch Network (A$2.54 billion), Wholesale Products (A$341.19 million), and Feed and Processing Services (A$120.14 million). Over the periods, the gross profit margin has shown variability, with recent figures around 17.29% to 21.71%. Operating expenses have consistently included significant sales and marketing costs, reflecting a substantial portion of their expenditure structure.
PE: 23.3x
Elders, a small cap in Australia, is currently seen as undervalued. Recently, insider confidence has been demonstrated by significant share purchases over the past six months. Despite having a high level of debt and profit margins decreasing from 3.4% to 2.1% year-over-year, earnings are projected to grow at 22.8% annually. The company also appointed Glenn Davis as a non-executive director effective November 1, 2024, bringing extensive legal and corporate governance experience to the board.
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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:CDA and ASX:ELD.
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