Is Now An Opportune Moment To Examine Eagers Automotive Limited (ASX:APE)?

While Eagers Automotive Limited (ASX:APE) might not have the largest market cap around , it saw a decent share price growth of 11% on the ASX over the last few months. The company is inching closer to its yearly highs following the recent share price climb. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Eagers Automotive’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Eagers Automotive

What Is Eagers Automotive Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 9.6% below our intrinsic value, which means if you buy Eagers Automotive today, you’d be paying a reasonable price for it. And if you believe the company’s true value is A$16.28, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Eagers Automotive’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.

Can we expect growth from Eagers Automotive?

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. However, with a negative profit growth of -1.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Eagers Automotive. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? APE seems fairly priced right now, 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 beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on APE 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 APE should the price fluctuate below its true value.

If you want to dive deeper into Eagers Automotive, you'd also look into what risks it is currently facing. When we did our research, we found 3 warning signs for Eagers Automotive (1 is a bit unpleasant!) that we believe deserve your full attention.

If you are no longer interested in Eagers Automotive, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.