Is Cyrela Brazil Realty S.A. Empreendimentos e Participações (BVMF:CYRE3) Potentially Undervalued?

Cyrela Brazil Realty S.A. Empreendimentos e Participações (BVMF:CYRE3), is not the largest company out there, but it saw a double-digit share price rise of over 10% 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, could the stock still be trading at a relatively cheap price? Let’s examine Cyrela Brazil Realty Empreendimentos e Participações’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Cyrela Brazil Realty Empreendimentos e Participações

What is Cyrela Brazil Realty Empreendimentos e Participações worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.5% below my intrinsic value, which means if you buy Cyrela Brazil Realty Empreendimentos e Participações today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth R$16.12, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Cyrela Brazil Realty Empreendimentos e Participações’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 kind of growth will Cyrela Brazil Realty Empreendimentos e Participações 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. 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. Cyrela Brazil Realty Empreendimentos e Participações' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? CYRE3’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on CYRE3, 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 Cyrela Brazil Realty Empreendimentos e Participações at this point in time. Every company has risks, and we've spotted 2 warning signs for Cyrela Brazil Realty Empreendimentos e Participações you should know about.

If you are no longer interested in Cyrela Brazil Realty Empreendimentos e Participações, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.