Is It Too Late To Consider Buying Natura &Co Holding S.A. (BVMF:NTCO3)?

Natura &Co Holding S.A. (BVMF:NTCO3), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the BOVESPA. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Natura &Co Holding’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Our analysis indicates that NTCO3 is potentially undervalued!

What's The Opportunity In Natura &Co Holding?

Great news for investors – Natura &Co Holding is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is R$21.45, but it is currently trading at R$14.14 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Natura &Co Holding’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 does the future of Natura &Co Holding look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Natura &Co Holding, it is expected to deliver a negative earnings growth of -6.6%, 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 NTCO3 is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to NTCO3, 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 tabs on NTCO3 for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. While conducting our analysis, we found that Natura &Co Holding has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Natura &Co Holding, 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.