Is It Time To Consider Buying Prosegur Compañía de Seguridad, S.A. (BME:PSG)?

While Prosegur Compañía de Seguridad, S.A. (BME:PSG) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the BME over the last few months, increasing to €1.84 at one point, and dropping to the lows of €1.62. 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 Compañía de Seguridad's current trading price of €1.69 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 Compañía de Seguridad’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 Compañía de Seguridad

What's The Opportunity In Prosegur Compañía de Seguridad?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Prosegur Compañía de Seguridad’s ratio of 15.54x is trading slightly above its industry peers’ ratio of 13.42x, which means if you buy Prosegur Compañía de Seguridad today, you’d be paying a relatively sensible price for it. And if you believe Prosegur Compañía de Seguridad should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Prosegur Compañía de Seguridad’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.

What does the future of Prosegur Compañía de Seguridad look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Prosegur Compañía de Seguridad's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in PSG’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 track record of its management team. Have these factors changed since the last time you looked at PSG? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on PSG, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for PSG, 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'd like to know more about Prosegur Compañía de Seguridad as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Prosegur Compañía de Seguridad you should be mindful of and 1 of these can't be ignored.

If you are no longer interested in Prosegur Compañía de Seguridad, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com