At R$25.16, Is It Time To Put Fleury S.A. (BVMF:FLRY3) On Your Watch List?

Fleury S.A. (BVMF:FLRY3), is not the largest company out there, but it received a lot of attention from a substantial price movement on the BOVESPA over the last few months, increasing to R$28.70 at one point, and dropping to the lows of R$24.34. 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 Fleury's current trading price of R$25.16 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 Fleury’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Fleury

What is Fleury worth?

Fleury appears to be overvalued by 37% at the moment, based on my discounted cash flow valuation. The stock is currently priced at R$25.16 on the market compared to my intrinsic value of R$18.31. This means that the opportunity to buy Fleury 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. Given that Fleury’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Fleury 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. With profit expected to grow by 98% over the next couple of years, the future seems bright for Fleury. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in FLRY3’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe FLRY3 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 FLRY3 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 FLRY3, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Fleury, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Fleury and we think they deserve your attention.

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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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