What Does EcoRodovias Infraestrutura e Logística S.A.'s (BVMF:ECOR3) Share Price Indicate?

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 increase on the BOVESPA over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. 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.

See our latest analysis for EcoRodovias Infraestrutura e Logística

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. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that EcoRodovias Infraestrutura e Logística’s ratio of 6.21x is below its peer average of 16.43x, which indicates the stock is trading at a lower price compared to the Infrastructure industry. Although, there may be another chance to buy again in the future. This is because EcoRodovias Infraestrutura e Logística’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will EcoRodovias Infraestrutura e Logística 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. 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 relatively unexciting earnings growth of 2.8%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since ECOR3 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on ECOR3 for a while, now might be the time to enter the stock. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ECOR3. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

So while earnings quality is important, it's equally important to consider the risks facing EcoRodovias Infraestrutura e Logística at this point in time. Every company has risks, and we've spotted 3 warning signs for EcoRodovias Infraestrutura e Logística (of which 2 are significant!) you should know about.

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.