Is There Now An Opportunity In EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3)?

EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the BOVESPA over the last few months, increasing to R$13.43 at one point, and dropping to the lows of R$11.14. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether EcoRodovias Infraestrutura e Logística's current trading price of R$11.95 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at EcoRodovias Infraestrutura e Logística’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for EcoRodovias Infraestrutura e Logística

What is EcoRodovias Infraestrutura e Logística worth?

Good news, investors! EcoRodovias Infraestrutura e Logística is still a bargain right now. My valuation model shows that the intrinsic value for the stock is R$19.54, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, EcoRodovias Infraestrutura e Logística’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of EcoRodovias Infraestrutura e Logística 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. However, with an expected decline of -14% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for EcoRodovias Infraestrutura e Logística. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although ECOR3 is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to ECOR3, 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 ECOR3 for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, 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 EcoRodovias Infraestrutura e Logística, you'd also look into what risks it is currently facing. To help with this, we've discovered 2 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in EcoRodovias Infraestrutura e Logística.

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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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