Should You Investigate Implenia AG (VTX:IMPN) At CHF23.00?

While Implenia AG (VTX:IMPN) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the SWX. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Implenia’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Implenia

What's the opportunity in Implenia?

Good news, investors! Implenia is still a bargain right now. According to my valuation, the intrinsic value for the stock is CHF33.54, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Implenia’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Implenia?

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 Implenia, it is expected to deliver a negative revenue growth of -13% 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 IMPN is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to IMPN, 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 IMPN for some time, 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.

So while earnings quality is important, it's equally important to consider the risks facing Implenia at this point in time. You'd be interested to know, that we found 1 warning sign for Implenia and you'll want to know about this.

If you are no longer interested in Implenia, 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.