When Should You Buy Moura Dubeux Engenharia S.A. (BVMF:MDNE3)?

While Moura Dubeux Engenharia S.A. (BVMF:MDNE3) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the BOVESPA over the last few months. The recent jump in the share price has meant that the company is trading at close to its 52-week high. With many analysts covering the 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 Moura Dubeux Engenharia’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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Is Moura Dubeux Engenharia Still Cheap?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’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 7.26x is currently trading slightly below its industry peers’ ratio of 7.34x, which means if you buy Moura Dubeux Engenharia today, you’d be paying a decent price for it. And if you believe Moura Dubeux Engenharia should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, Moura Dubeux Engenharia’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

See our latest analysis for Moura Dubeux Engenharia

What does the future of Moura Dubeux Engenharia look like?

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. 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 55% over the next couple of years, the future seems bright for Moura Dubeux Engenharia. 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 already priced in MDNE3’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at MDNE3? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on MDNE3, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for MDNE3, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Moura Dubeux Engenharia has 2 warning signs we think you should be aware of.

If you are no longer interested in Moura Dubeux Engenharia, 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.