What Is Nokian Renkaat Oyj's (HEL:TYRES) Share Price Doing?

Nokian Renkaat Oyj (HEL:TYRES), might not be a large cap stock, but it led the HLSE gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Nokian Renkaat Oyj’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Nokian Renkaat Oyj

Is Nokian Renkaat Oyj Still Cheap?

Great news for investors – Nokian Renkaat Oyj is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €15.33, but it is currently trading at €11.56 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Nokian Renkaat Oyj’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Nokian Renkaat Oyj?

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 expected decline of -18% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Nokian Renkaat Oyj. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although TYRES is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to TYRES, 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 an eye on TYRES for a while, 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.

So while earnings quality is important, it's equally important to consider the risks facing Nokian Renkaat Oyj at this point in time. Case in point: We've spotted 1 warning sign for Nokian Renkaat Oyj you should be aware of.

If you are no longer interested in Nokian Renkaat Oyj, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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

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.