Is It Time To Consider Buying Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA)?

Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA), which is in the basic materials business, and is based in Argentina, saw significant share price movement during recent months on the NYSE, rising to highs of US$8.20 and falling to the lows of US$5.80. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Loma Negra Compañía Industrial Argentina Sociedad Anónima’s current trading price of US$5.80 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Loma Negra Compañía Industrial Argentina Sociedad Anónima’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Loma Negra Compañía Industrial Argentina Sociedad Anónima

What’s the opportunity in Loma Negra Compañía Industrial Argentina Sociedad Anónima?

The share price seems sensible at the moment according to my price multiple model, where I compare the company’s price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Loma Negra Compañía Industrial Argentina Sociedad Anónima’s ratio of 12.46x is trading slightly below its industry peers’ ratio of 17.45x, which means if you buy Loma Negra Compañía Industrial Argentina Sociedad Anónima today, you’d be paying a reasonable price for it. And if you believe that Loma Negra Compañía Industrial Argentina Sociedad Anónima should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Loma Negra Compañía Industrial Argentina Sociedad Anónima’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Loma Negra Compañía Industrial Argentina Sociedad Anónima?

NYSE:LOMA Past and Future Earnings, March 9th 2020
NYSE:LOMA Past and Future Earnings, March 9th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Loma Negra Compañía Industrial Argentina Sociedad Anónima’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? LOMA’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at LOMA? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on LOMA, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for LOMA, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Loma Negra Compañía Industrial Argentina Sociedad Anónima. You can find everything you need to know about Loma Negra Compañía Industrial Argentina Sociedad Anónima in the latest infographic research report. If you are no longer interested in Loma Negra Compañía Industrial Argentina Sociedad Anónima, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.