While Servizi Italia S.p.A. (BIT:SRI) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the BIT over the last few months, increasing to €2.48 at one point, and dropping to the lows of €2.22. 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 Servizi Italia’s current trading price of €2.23 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 Servizi Italia’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Servizi Italia worth?
Servizi Italia appears to be overvalued by 32% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €2.23 on the market compared to my intrinsic value of €1.69. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Servizi Italia’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Servizi Italia generate?
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. 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. With profit expected to grow by 63% over the next couple of years, the future seems bright for Servizi Italia. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in SRI’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe SRI should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on SRI for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for SRI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Servizi Italia, you’d also look into what risks it is currently facing. For example – Servizi Italia has 5 warning signs we think you should be aware of.
If you are no longer interested in Servizi Italia, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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. 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.
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