Why Mitre Realty Empreendimentos e Participações S.A. (BVMF:MTRE3) Could Be Worth Watching

Mitre Realty Empreendimentos e Participações S.A. (BVMF:MTRE3), is not the largest company out there, but it led the BOVESPA gainers with a relatively large price hike in the past couple of weeks. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Mitre Realty Empreendimentos e Participações’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Mitre Realty Empreendimentos e Participações

Is Mitre Realty Empreendimentos e Participações Still Cheap?

Mitre Realty Empreendimentos e Participações appears to be overvalued by 23% at the moment, based on our discounted cash flow valuation. The stock is currently priced at R$4.59 on the market compared to our intrinsic value of R$3.74. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Mitre Realty Empreendimentos e Participações’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Mitre Realty Empreendimentos e Participações 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. With profit expected to grow by 78% over the next couple of years, the future seems bright for Mitre Realty Empreendimentos e Participações. 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? MTRE3’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MTRE3 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 an eye on MTRE3 for a while, 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 MTRE3, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. To help with this, we've discovered 4 warning signs (2 shouldn't be ignored!) that you ought to be aware of before buying any shares in Mitre Realty Empreendimentos e Participações.

If you are no longer interested in Mitre Realty Empreendimentos e Participações, 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.