Why Cyrela Brazil Realty S.A. Empreendimentos e Participações (BVMF:CYRE3) Could Be Worth Watching

Cyrela Brazil Realty S.A. Empreendimentos e Participações (BVMF:CYRE3), is not the largest company out there, but it saw significant share price movement during recent months on the BOVESPA, rising to highs of R$31.71 and falling to the lows of R$24.49. 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 Cyrela Brazil Realty Empreendimentos e Participações' current trading price of R$24.71 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 Cyrela Brazil Realty Empreendimentos e Participações’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 Cyrela Brazil Realty Empreendimentos e Participações

What's the opportunity in Cyrela Brazil Realty Empreendimentos e Participações?

Good news, investors! Cyrela Brazil Realty Empreendimentos e Participações 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. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Cyrela Brazil Realty Empreendimentos e Participações’s ratio of 5.76x is below its peer average of 15.58x, which indicates the stock is trading at a lower price compared to the Consumer Durables industry. Although, there may be another chance to buy again in the future. This is because Cyrela Brazil Realty Empreendimentos e Participações’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.

What does the future of Cyrela Brazil Realty Empreendimentos e Participações 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. Though in the case of Cyrela Brazil Realty Empreendimentos e Participações, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although CYRE3 is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to CYRE3, 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 an eye on CYRE3 for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, 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 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. Case in point: We've spotted 3 warning signs for Cyrela Brazil Realty Empreendimentos e Participações you should be mindful of and 1 of them doesn't sit too well with us.

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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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