Is It Too Late To Consider Buying Nicolás Correa, S.A. (BME:NEA)?

Nicolás Correa, S.A. (BME:NEA), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the BME. Less-covered, small caps tend to present 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 Nicolás Correa’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Nicolás Correa

Is Nicolás Correa still cheap?

Good news, investors! Nicolás Correa is still a bargain right now. According to my valuation, the intrinsic value for the stock is €6.34, but it is currently trading at €4.97 on the share market, meaning that there is still an opportunity to buy now. However, given that Nicolás Correa’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 Nicolás Correa 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. Though in the case of Nicolás Correa, it is expected to deliver a relatively unexciting earnings growth of 2.8%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since NEA is currently undervalued, it may be a great time to increase your holdings in the stock. 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 NEA for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy NEA. 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 investment decision.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Nicolás Correa has 2 warning signs and it would be unwise to ignore these.

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This article by Simply Wall St is general in nature. 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.
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