The devil is obviously in the detail of a seemingly bullish market update from Tremor International Ltd (AIM:TRMR), the video advertising group.
According to brokers, the first-quarter deep dive showed the business was actually performing marginally ahead of forecasts despite the share price indicating the opposite.
finnCap, Tremor’s corporate advisor, reckons the company is significantly undervalued when compared to its competitors.
This is based on its enterprise value-to-earnings multiple, a common financial metric used to compare companies.
For the next 12 months, Tremor is predicted to have an earnings multiple of just two, meaning that its overall value is just twice that of its earnings before interest, taxes, depreciation, and amortisation (EBITDA).
This is low, especially considering it's expected to grow its earnings by over 5%.
In comparison, US-based competitors have enterprise multiples ranging from seven to 40, with their earnings expected to change anywhere from a 4% decrease to a 17% increase, finnCap said in a note to clients.
Meanwhile, Tremor's peers in the finnCap Tech 40, a group of technology-focused companies, have an average earnings multiple of 12, with expected earnings growth of 7%.
At 9.38 am, the stock was changing hands for 237.8p, down 20%.