What Is Econocom Group SE's (EBR:ECONB) Share Price Doing?

By
Simply Wall St
Published
October 06, 2021
ENXTBR:ECONB
Source: Shutterstock

Econocom Group SE (EBR:ECONB), is not the largest company out there, but it saw significant share price movement during recent months on the ENXTBR, rising to highs of €3.68 and falling to the lows of €3.10. 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 Econocom Group's current trading price of €3.10 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 Econocom Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Econocom Group

Is Econocom Group still cheap?

Good news, investors! Econocom Group is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.39x is currently well-below the industry average of 25.98x, meaning that it is trading at a cheaper price relative to its peers. However, given that Econocom Group’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.

Can we expect growth from Econocom Group?

earnings-and-revenue-growth
ENXTBR:ECONB Earnings and Revenue Growth October 7th 2021

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. Econocom Group's earnings over the next few years are expected to increase by 28%, 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? Since ECONB is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on ECONB for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ECONB. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 2 warning signs for Econocom Group and you'll want to know about these.

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

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