Is Prosegur Compañía de Seguridad, S.A. (BME:PSG) Potentially Undervalued?

Prosegur Compañía de Seguridad, S.A. (BME:PSG), is not the largest company out there, but it saw significant share price movement during recent months on the BME, rising to highs of €2.84 and falling to the lows of €2.42. 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 €2.61 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

Is Prosegur Compañía de Seguridad still cheap?

Great news for investors – Prosegur Compañía de Seguridad is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €3.48, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Prosegur Compañía de Seguridad’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.

Can we expect growth from Prosegur Compañía de Seguridad?

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 Prosegur Compañía de Seguridad, at least in the near future.

What this means for you:

Are you a shareholder? Although PSG is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to PSG, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on PSG for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

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. For example, Prosegur Compañía de Seguridad has 2 warning signs (and 1 which doesn't sit too well with us) we think 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. 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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