AG’s Q4 didn’t go quite as planned this time, in a way that an owner could have just glanced at the interim report and gone back to sleep. (Which would have been fine).
The figures themselves were reasonable enough. In my (and probably many others’) books, AI has been the thing that is a difficult-to-grasp question mark in the long run for an average Joe like me. Something you have to ponder occasionally—how to view it and on what timeframe it might affect the company. Otherwise, this is very defensive business.
Now, a new question entered the equation: accounting software development. What it costs, how long it takes, etc. At the same time, the analyst reported that their uncertainty regarding the long-term outlook for the company (and the industry) has increased (e.g., that AI), and the stock is rated ‘reduce’ at a price of 10.10.
This raised a question for me: if AG was already quite unpopular (and therefore so cheap), is it sliding even deeper into the bargain bin, where investors are only willing to pay very low multiples? For these low-volume and sparsely followed stocks, the limited analysis available often impacts the trend more than with large companies. Of course, the company has the opportunity over time to prove that it can still grow organically and that AI won’t take the bread off the table. One thesis for this stock has been the unwinding of the undervaluation. Its realization took a setback, to say the least.
Summa summarum: a boring company saw way too many exciting twists.