At CL$2,000, Is Falabella S.A. (SNSE:FALABELLA) Worth Looking At Closely?

While Falabella S.A. (SNSE:FALABELLA) 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 SNSE. With many analysts covering the mid-cap 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 Falabella’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Falabella

What Is Falabella Worth?

Good news, investors! Falabella is still a bargain right now. My valuation model shows that the intrinsic value for the stock is CLP2600.04, but it is currently trading at CL$2,000 on the share market, meaning that there is still an opportunity to buy now. However, given that Falabella’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.

What kind of growth will Falabella 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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With revenues expected to grow by a double-digit 15% over the next couple of years, the outlook is positive for Falabella. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? Since FALABELLA is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on FALABELLA for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FALABELLA. 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 buy.

So while earnings quality is important, it's equally important to consider the risks facing Falabella at this point in time. In terms of investment risks, we've identified 1 warning sign with Falabella, and understanding this should be part of your investment process.

If you are no longer interested in Falabella, 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.