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

Prosegur Compañía de Seguridad, S.A. (BME:PSG), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the BME over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Prosegur Compañía de Seguridad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What Is Prosegur Compañía de Seguridad Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 1.54% above our intrinsic value, which means if you buy Prosegur Compañía de Seguridad today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth €2.76, there’s only an insignificant downside when the price falls to its real value. 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.

See our latest analysis for Prosegur Compañía de Seguridad

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. 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. With profit expected to grow by 52% 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? PSG’s optimistic future growth appears to have been factored into the current share price, 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 advantageous 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.

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 is potentially serious.

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.