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

Prosegur Compañía de Seguridad, S.A. (BME:PSG), 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 €1.89 at one point, and dropping to the lows of €1.59. 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 Compañía de Seguridad's current trading price of €1.65 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.

Check out our latest analysis for Prosegur Compañía de Seguridad

What Is Prosegur Compañía de Seguridad Worth?

According to my valuation model, Prosegur Compañía de Seguridad seems to be fairly priced at around 5.7% below my intrinsic value, which means if you buy Prosegur Compañía de Seguridad today, you’d be paying a fair price for it. And if you believe that the stock is really worth €1.75, 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 Prosegur Compañía de Seguridad’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.

Can we expect growth from Prosegur Compañía de Seguridad?

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 more than double over the next couple of years, the future seems bright for Prosegur Compañía de Seguridad. 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 PSG’s positive outlook, 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 its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

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 its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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. Every company has risks, and we've spotted 2 warning signs for Prosegur Compañía de Seguridad (of which 1 is a bit unpleasant!) you should know about.

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.