Should You Think About Buying Hapvida Participações e Investimentos S.A. (BVMF:HAPV3) Now?

Let's talk about the popular Hapvida Participações e Investimentos S.A. (BVMF:HAPV3). The company's shares received a lot of attention from a substantial price movement on the BOVESPA over the last few months, increasing to R$16.00 at one point, and dropping to the lows of R$14.20. 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 Hapvida Participações e Investimentos' current trading price of R$14.42 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Hapvida Participações e Investimentos’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 Hapvida Participações e Investimentos

Is Hapvida Participações e Investimentos still cheap?

Hapvida Participações e Investimentos is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 69.64x is currently well-above the industry average of 17.7x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that Hapvida Participações e Investimentos’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

Can we expect growth from Hapvida Participações e Investimentos?

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. Hapvida Participações e Investimentos' earnings over the next few years are expected to increase by 93%, 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? HAPV3’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe HAPV3 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 an eye on HAPV3 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for HAPV3, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Hapvida Participações e Investimentos as a business, it's important to be aware of any risks it's facing. For example - Hapvida Participações e Investimentos has 2 warning signs we think you should be aware of.

If you are no longer interested in Hapvida Participações e Investimentos, 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. 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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