Is Now The Time To Look At Buying Fomento de Construcciones y Contratas, S.A. (BME:FCC)?

While Fomento de Construcciones y Contratas, S.A. (BME:FCC) 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. But what if there is still an opportunity to buy? Let’s examine Fomento de Construcciones y Contratas’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Fomento de Construcciones y Contratas

Is Fomento de Construcciones y Contratas Still Cheap?

According to my valuation model, Fomento de Construcciones y Contratas seems to be fairly priced at around 5.4% below my intrinsic value, which means if you buy Fomento de Construcciones y Contratas today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €9.57, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Fomento de Construcciones y Contratas’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Fomento de Construcciones y Contratas look like?

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. 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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Fomento de Construcciones y Contratas, at least in the near future.

What This Means For You

Are you a shareholder? Currently, FCC appears to be trading around its fair value, 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 beneficial 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 an eye on FCC 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 FCC should the price fluctuate below its true value.

If you want to dive deeper into Fomento de Construcciones y Contratas, you'd also look into what risks it is currently facing. For instance, we've identified 5 warning signs for Fomento de Construcciones y Contratas (1 makes us a bit uncomfortable) you should be familiar with.

If you are no longer interested in Fomento de Construcciones y Contratas, 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.