Is There Now An Opportunity In MAHLE Metal Leve S.A. (BVMF:LEVE3)?

By
Simply Wall St
Published
April 12, 2022
BOVESPA:LEVE3
Source: Shutterstock

While MAHLE Metal Leve S.A. (BVMF:LEVE3) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the BOVESPA over the last few months, increasing to R$32.72 at one point, and dropping to the lows of R$23.73. 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 MAHLE Metal Leve's current trading price of R$23.73 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 MAHLE Metal Leve’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 MAHLE Metal Leve

What's the opportunity in MAHLE Metal Leve?

Great news for investors – MAHLE Metal Leve is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is R$35.54, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because MAHLE Metal Leve’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from MAHLE Metal Leve?

earnings-and-revenue-growth
BOVESPA:LEVE3 Earnings and Revenue Growth April 12th 2022

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. However, with a negative profit growth of -19% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for MAHLE Metal Leve. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although LEVE3 is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to LEVE3, 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 tabs on LEVE3 for some time, 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 4 warning signs for MAHLE Metal Leve (of which 3 are potentially serious!) you should know about.

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

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