Is Marfrig Global Foods S.A. (BVMF:MRFG3) Potentially Undervalued?

Marfrig Global Foods S.A. (BVMF:MRFG3), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the BOVESPA over the last few months. The company is inching closer to its yearly highs following the recent share price climb. 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 take a look at Marfrig Global Foods’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Marfrig Global Foods

Is Marfrig Global Foods Still Cheap?

Good news, investors! Marfrig Global Foods is still a bargain right now. According to our valuation, the intrinsic value for the stock is R$18.75, but it is currently trading at R$11.28 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Marfrig Global Foods’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Marfrig Global Foods?

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 the upcoming year, Marfrig Global Foods' earnings are expected to increase by 88%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since MRFG3 is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MRFG3 for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MRFG3. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Our analysis shows 4 warning signs for Marfrig Global Foods (1 is significant!) and we strongly recommend you look at them before investing.

If you are no longer interested in Marfrig Global Foods, 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.