Should You Think About Buying CIE Automotive, S.A. (BME:CIE) Now?

While CIE Automotive, S.A. (BME:CIE) 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 BME. 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 take a look at CIE Automotive’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for CIE Automotive

What Is CIE Automotive Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy CIE Automotive today, you’d be paying a fair price for it. And if you believe the company’s true value is €31.88, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that CIE Automotive’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can We Expect Decent Returns From CIE Automotive?

What kind of returns can we expect from CIE Automotive in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. We can determine the quality of a stock many ways; one way is to look at how much return it generates relative to the money we’ve invested in the stock. CIE Automotive is expected to return 22% of your investment in the next couple of years if you buy the stock today. This is a solid return on your investment which builds up the case for owning the stock.

What This Means For You

Are you a shareholder? CIE’s optimistic future return appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of the company’s management team. Has anything significant changed since the last time you examined CIE? And will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on CIE for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for CIE, which means it’s worth diving deeper into other factors such as the track record of its management team, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 2 warning signs with CIE Automotive, and understanding these should be part of your investment process.

If you are no longer interested in CIE Automotive, 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.