Why Compagnie d'Entreprises CFE SA (EBR:CFEB) Could Be Worth Watching

Compagnie d'Entreprises CFE SA (EBR:CFEB), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the ENXTBR. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Compagnie d'Entreprises CFE’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Compagnie d'Entreprises CFE

Is Compagnie d'Entreprises CFE still cheap?

Great news for investors – Compagnie d'Entreprises CFE is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €88.71, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Compagnie d'Entreprises CFE’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 Compagnie d'Entreprises CFE 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. Though in the case of Compagnie d'Entreprises CFE, it is expected to deliver a negative earnings growth of -0.02%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although CFEB is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to CFEB, 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 an eye on CFEB for a while, but hesitant on making the leap, I recommend you research further 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.

If you'd like to know more about Compagnie d'Entreprises CFE as a business, it's important to be aware of any risks it's facing. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of Compagnie d'Entreprises CFE.

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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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