- Renewable Energy
Should You Think About Buying Audax Renovables, S.A. (BME:ADX) Now?
Audax Renovables, S.A. (BME:ADX), might not be a large cap stock, but it led the BME gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Audax Renovables’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Audax Renovables
Is Audax Renovables Still Cheap?
According to my valuation model, the stock is currently overvalued by about 23%, trading at €1.18 compared to my intrinsic value of €0.96. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Audax Renovables’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Audax Renovables look like?
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. Audax Renovables' 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 well and truly priced in ADX’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ADX should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on ADX for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for ADX, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Audax Renovables, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in Audax Renovables.
If you are no longer interested in Audax Renovables, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Valuation is complex, but we're helping make it simple.
Find out whether Audax Renovables is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
Audax Renovables, S.A. engages in the generation and supplying of renewable electricity and gas in Spain, in seven European countries.
Reasonable growth potential with mediocre balance sheet.