Should You Think About Buying Suzano S.A. (BVMF:SUZB3) Now?

Today we're going to take a look at the well-established Suzano S.A. (BVMF:SUZB3). The company's stock received a lot of attention from a substantial price increase on the BOVESPA over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Suzano’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Suzano

What is Suzano worth?

According to my valuation model, Suzano seems to be fairly priced at around 10% below my intrinsic value, which means if you buy Suzano today, you’d be paying a reasonable price for it. And if you believe the company’s true value is R$65.82, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Suzano has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Suzano 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 Suzano, it is expected to deliver a highly negative earnings growth in the next few years, 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? Currently, SUZB3 appears to be trading around its fair value, 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 an eye on SUZB3 for a while, now may not be the most advantageous 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. Furthermore, 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 SUZB3 should the price fluctuate below its true value.

If you want to dive deeper into Suzano, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Suzano.

If you are no longer interested in Suzano, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.