Is It Time To Consider Buying Shurgard Self Storage S.A. (EBR:SHUR)?

While Shurgard Self Storage S.A. (EBR:SHUR) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the ENXTBR over the last few months, increasing to €53.40 at one point, and dropping to the lows of €38.50. 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 Shurgard Self Storage's current trading price of €40.80 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 Shurgard Self Storage’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Shurgard Self Storage

What's The Opportunity In Shurgard Self Storage?

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. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Shurgard Self Storage’s ratio of 5.42x is trading slightly above its industry peers’ ratio of 5.14x, which means if you buy Shurgard Self Storage today, you’d be paying a relatively sensible price for it. And if you believe that Shurgard Self Storage should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, Shurgard Self Storage’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will Shurgard Self Storage 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 Shurgard Self Storage, it is expected to deliver a highly negative earnings growth in the next few years, 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? SHUR seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 SHUR, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on SHUR for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This 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 SHUR should the price fluctuate below the industry PE ratio.

If you want to dive deeper into Shurgard Self Storage, you'd also look into what risks it is currently facing. For example, Shurgard Self Storage has 3 warning signs (and 1 which is concerning) we think you should know about.

If you are no longer interested in Shurgard Self Storage, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.