At R$21.25, Is Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) Worth Looking At Closely?

Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3), is not the largest company out there, but it saw a decent share price growth in the teens level on the BOVESPA over the last few months. 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. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Multiplan Empreendimentos Imobiliários’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Multiplan Empreendimentos Imobiliários

What's the opportunity in Multiplan Empreendimentos Imobiliários?

Great news for investors – Multiplan Empreendimentos Imobiliários 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. I’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 13.23x is currently well-below the industry average of 23.19x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Multiplan Empreendimentos Imobiliários’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Multiplan Empreendimentos Imobiliários?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. 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 Multiplan Empreendimentos Imobiliários, at least in the near future.

What this means for you:

Are you a shareholder? Although MULT3 is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to MULT3, 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 MULT3 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. To that end, you should learn about the 4 warning signs we've spotted with Multiplan Empreendimentos Imobiliários (including 2 which are a bit unpleasant).

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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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