At R$1.52, Is International Meal Company Alimentação S.A. (BVMF:MEAL3) Worth Looking At Closely?

International Meal Company Alimentação S.A. (BVMF:MEAL3), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the BOVESPA over the last few months, increasing to R$2.77 at one point, and dropping to the lows of R$1.52. 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 International Meal Company Alimentação's current trading price of R$1.52 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 International Meal Company Alimentação’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 International Meal Company Alimentação

What's The Opportunity In International Meal Company Alimentação?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.2% below my intrinsic value, which means if you buy International Meal Company Alimentação today, you’d be paying a reasonable price for it. And if you believe the company’s true value is R$1.55, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since International Meal Company Alimentação’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 International Meal Company Alimentação 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for International Meal Company Alimentação, at least in the near future.

What This Means For You

Are you a shareholder? MEAL3 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on MEAL3 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on MEAL3 should the price fluctuate below its true value.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, International Meal Company Alimentação has 3 warning signs (and 2 which can't be ignored) we think you should know about.

If you are no longer interested in International Meal Company Alimentação, 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.