Is Now An Opportune Moment To Examine Iochpe-Maxion S.A. (BVMF:MYPK3)?

By
Simply Wall St
Published
July 13, 2021
BOVESPA:MYPK3
Source: Shutterstock

While Iochpe-Maxion S.A. (BVMF:MYPK3) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the BOVESPA. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Iochpe-Maxion’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Iochpe-Maxion

What's the opportunity in Iochpe-Maxion?

According to my valuation model, Iochpe-Maxion seems to be fairly priced at around 18% below my intrinsic value, which means if you buy Iochpe-Maxion today, you’d be paying a fair price for it. And if you believe that the stock is really worth R$18.67, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Iochpe-Maxion’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Iochpe-Maxion look like?

earnings-and-revenue-growth
BOVESPA:MYPK3 Earnings and Revenue Growth July 13th 2021

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In Iochpe-Maxion's case, its revenues over the next few years are expected to grow by 43%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? MYPK3’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 an eye on MYPK3, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 Iochpe-Maxion at this point in time. You'd be interested to know, that we found 1 warning sign for Iochpe-Maxion and you'll want to know about it.

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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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.