Why STEICO SE (ETR:ST5) Could Be Worth Watching

STEICO SE (ETR:ST5), is not the largest company out there, but it saw significant share price movement during recent months on the XTRA, rising to highs of €86.60 and falling to the lows of €63.50. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether STEICO's current trading price of €69.00 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at STEICO’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for STEICO

What Is STEICO Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.8% below my intrinsic value, which means if you buy STEICO today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €75.70, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since STEICO’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from STEICO?

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. However, with a negative profit growth of -3.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for STEICO. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? ST5 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ST5 for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on ST5 should the price fluctuate below its true value.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for STEICO and we think they deserve your attention.

If you are no longer interested in STEICO, 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.