Is LOG Commercial Properties e Participações S.A. (BVMF:LOGG3) Potentially Undervalued?

LOG Commercial Properties e Participações S.A. (BVMF:LOGG3), 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 stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine LOG Commercial Properties e Participações’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for LOG Commercial Properties e Participações

What is LOG Commercial Properties e Participações worth?

Great news for investors – LOG Commercial Properties e Participações is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that LOG Commercial Properties e Participações’s ratio of 13.82x is below its peer average of 25.01x, which indicates the stock is trading at a lower price compared to the Real Estate industry. What’s more interesting is that, LOG Commercial Properties e Participações’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.

Can we expect growth from LOG Commercial Properties e Participações?

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for LOG Commercial Properties e Participações, at least in the near future.

What this means for you:

Are you a shareholder? Although LOGG3 is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to LOGG3, 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 LOGG3 for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into LOG Commercial Properties e Participações, you'd also look into what risks it is currently facing. While conducting our analysis, we found that LOG Commercial Properties e Participações has 1 warning sign and it would be unwise to ignore this.

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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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