Metsä Board Oyj (HEL:METSB), which is in the forestry business, and is based in Finland, saw significant share price movement during recent months on the HLSE, rising to highs of €6.64 and falling to the lows of €5.36. 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 Metsä Board Oyj’s current trading price of €5.70 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 Metsä Board Oyj’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Metsä Board Oyj still cheap?
Great news for investors – Metsä Board Oyj is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €7.73, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Metsä Board Oyj’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 does the future of Metsä Board Oyj look like?
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. However, with a negative profit growth of -8.6% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Metsä Board Oyj. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although METSB is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to METSB, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on METSB for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Metsä Board Oyj. You can find everything you need to know about Metsä Board Oyj in the latest infographic research report. If you are no longer interested in Metsä Board Oyj, 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 firstname.lastname@example.org. 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.
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