Is It Time To Consider Buying Mediobanca Banca di Credito Finanziario S.p.A. (BIT:MB)?

Mediobanca Banca di Credito Finanziario S.p.A. (BIT:MB), operating in the financial services industry based in Italy, received a lot of attention from a substantial price movement on the BIT over the last few months, increasing to €9.47 at one point, and dropping to the lows of €8.22. 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 Mediobanca Banca di Credito Finanziario's current trading price of €8.51 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mediobanca Banca di Credito Finanziario’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Mediobanca Banca di Credito Finanziario

What is Mediobanca Banca di Credito Finanziario worth?

According to my relative valuation model, the stock seems to be currently fairly priced. 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 Mediobanca Banca di Credito Finanziario’s ratio of 8.74x is trading slightly above its industry peers’ ratio of 7.59x, which means if you buy Mediobanca Banca di Credito Finanziario today, you’d be paying a relatively fair price for it. And if you believe that Mediobanca Banca di Credito Finanziario should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Mediobanca Banca di Credito Finanziario’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Mediobanca Banca di Credito Finanziario look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Mediobanca Banca di Credito Finanziario, it is expected to deliver a negative earnings growth of -2.2%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Currently, MB appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on MB, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on MB for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on MB should the price fluctuate below its true value.

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

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.

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. Thank you for reading.