Is There Now An Opportunity In Iochpe-Maxion S.A. (BVMF:MYPK3)?

Iochpe-Maxion S.A. (BVMF:MYPK3), might not be a large cap stock, but it saw a decent share price growth in the teens level on the BOVESPA over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. 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.

View our latest analysis for Iochpe-Maxion

Is Iochpe-Maxion still cheap?

The stock is currently trading at R$14.41 on the share market, which means it is overvalued by 24% compared to my intrinsic value of R$11.65. This means that the opportunity to buy Iochpe-Maxion at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Iochpe-Maxion’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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?

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. In Iochpe-Maxion's case, its revenues over the next few years are expected to grow by 36%, 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 above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MYPK3 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on MYPK3 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for MYPK3, which means it’s worth diving deeper into other factors 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. Be aware that Iochpe-Maxion is showing 2 warning signs in our investment analysis and 1 of those shouldn't be ignored...

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

If you decide to trade Iochpe-Maxion, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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