Should You Investigate Sinqia S.A. (BVMF:SQIA3) At R$19.75?

Sinqia S.A. (BVMF:SQIA3), might not be a large cap stock, but it saw a significant share price rise of over 20% 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. But what if there is still an opportunity to buy? Let’s take a look at Sinqia’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Sinqia

What's The Opportunity In Sinqia?

According to my valuation model, Sinqia seems to be fairly priced at around 10% below my intrinsic value, which means if you buy Sinqia today, you’d be paying a reasonable price for it. And if you believe the company’s true value is R$22.05, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Sinqia’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Sinqia?

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. Sinqia's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in SQIA3’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on SQIA3, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into 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. You'd be interested to know, that we found 1 warning sign for Sinqia and you'll want to know about this.

If you are no longer interested in Sinqia, 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.