Is Cenergy Holdings SA (EBR:CENER) Potentially Undervalued?

Cenergy Holdings SA (EBR:CENER), is not the largest company out there, but it received a lot of attention from a substantial price movement on the ENXTBR over the last few months, increasing to €7.40 at one point, and dropping to the lows of €5.29. 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 Cenergy Holdings' current trading price of €5.29 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 Cenergy Holdings’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 Cenergy Holdings

What's The Opportunity In Cenergy Holdings?

According to my valuation model, Cenergy Holdings seems to be fairly priced at around 11.88% above my intrinsic value, which means if you buy Cenergy Holdings today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is €4.73, there’s only an insignificant downside when the price falls to its real value. What's more, Cenergy Holdings’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Cenergy Holdings generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Cenergy Holdings' earnings over the next few years are expected to increase by 57%, 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? CENER’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on CENER, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

So while earnings quality is important, it's equally important to consider the risks facing Cenergy Holdings at this point in time. For instance, we've identified 2 warning signs for Cenergy Holdings (1 is potentially serious) you should be familiar with.

If you are no longer interested in Cenergy Holdings, 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.