When Should You Buy CCR S.A. (BVMF:CCRO3)?

While CCR S.A. (BVMF:CCRO3) might not be the most widely known stock at the moment, it led the BOVESPA gainers with a relatively large price hike in the past couple of weeks. 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 CCR’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for CCR

What's the opportunity in CCR?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.5% below my intrinsic value, which means if you buy CCR today, you’d be paying a fair price for it. And if you believe that the stock is really worth R$13.20, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, CCR’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will CCR generate?

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. CCR'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? CCRO3’s optimistic future growth appears to have been factored into the current share price, 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on CCRO3, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

So while earnings quality is important, it's equally important to consider the risks facing CCR at this point in time. Case in point: We've spotted 4 warning signs for CCR you should be mindful of and 2 of them are a bit concerning.

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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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