Should You Think About Buying Société Générale Société anonyme (EPA:GLE) Now?

Société Générale Société anonyme (EPA:GLE) saw significant share price movement during recent months on the ENXTPA, rising to highs of €31.94 and falling to the lows of €13.80. 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 Société Générale Société anonyme’s current trading price of €14.67 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Société Générale Société anonyme’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 Société Générale Société anonyme

What’s the opportunity in Société Générale Société anonyme?

According to my price multiple model, which makes a comparison between the company’s price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 4.8x is currently trading slightly below its industry peers’ ratio of 6.84x, which means if you buy Société Générale Société anonyme today, you’d be paying a decent price for it. And if you believe Société Générale Société anonyme should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Société Générale Société anonyme’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 kind of growth will Société Générale Société anonyme generate?

ENXTPA:GLE Past and Future Earnings, March 23rd 2020
ENXTPA:GLE Past and Future Earnings, March 23rd 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Société Générale Société anonyme’s earnings over the next few years are expected to increase by 37%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? GLE’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 track record of its management team. Have these factors changed since the last time you looked at GLE? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on GLE, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for GLE, which means it’s worth further examining 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 Société Générale Société anonyme. You can find everything you need to know about Société Générale Société anonyme in the latest infographic research report. If you are no longer interested in Société Générale Société anonyme, 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.