When Should You Buy EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3)?

While EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the BOVESPA. 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? Today I will analyse the most recent data on EcoRodovias Infraestrutura e Logística’s outlook and valuation to see if the opportunity still exists.

View 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 my valuation, the intrinsic value for the stock is R$14.73, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that EcoRodovias Infraestrutura e Logística’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

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 revenue growth of -14% over the next couple of years, 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 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 an eye on ECOR3 for a while, but hesitant on making the leap, I recommend you research further 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, EcoRodovias Infraestrutura e Logística has 2 warning signs (and 1 which is a bit unpleasant) we think 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.