Should You Investigate Prosegur Cash, S.A. (BME:CASH) At €0.63?

Prosegur Cash, S.A. (BME:CASH), is not the largest company out there, but it received a lot of attention from a substantial price movement on the BME over the last few months, increasing to €0.72 at one point, and dropping to the lows of €0.59. 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 Prosegur Cash's current trading price of €0.63 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 Prosegur Cash’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 Prosegur Cash

Is Prosegur Cash Still Cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.32x is currently trading slightly below its industry peers’ ratio of 14.54x, which means if you buy Prosegur Cash today, you’d be paying a reasonable price for it. And if you believe that Prosegur Cash should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like Prosegur Cash’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Prosegur Cash generate?

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. With profit expected to grow by 70% over the next couple of years, the future seems bright for Prosegur Cash. 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? It seems like the market has already priced in CASH’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at CASH? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on CASH, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for CASH, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Prosegur Cash, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Prosegur Cash you should be aware of.

If you are no longer interested in Prosegur Cash, 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.