Should You Investigate EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3) At R$6.90?

While EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the BOVESPA over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. 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 EcoRodovias Infraestrutura e Logística’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What's The Opportunity In EcoRodovias Infraestrutura e Logística?

Great news for investors – EcoRodovias Infraestrutura e Logística is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 5.86x is currently well-below the industry average of 15.69x, meaning that it is trading at a cheaper price relative to its peers. EcoRodovias Infraestrutura e Logística’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

See our latest analysis for EcoRodovias Infraestrutura e Logística

Can we expect growth from EcoRodovias Infraestrutura e Logística?

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. Though in the case of EcoRodovias Infraestrutura e Logística, it is expected to deliver a negative earnings growth of -13%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Although ECOR3 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 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 an eye on ECOR3 for a while, but hesitant on making the leap, we 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'd like to know more about EcoRodovias Infraestrutura e Logística as a business, it's important to be aware of any risks it's facing. To help with this, we've discovered 4 warning signs (2 don't sit too well with us!) that you ought to be aware of before buying any shares in EcoRodovias Infraestrutura e Logística.

If you are no longer interested in EcoRodovias Infraestrutura e Logística, 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.