When Should You Buy UPM-Kymmene Oyj (HEL:UPM)?

Today we're going to take a look at the well-established UPM-Kymmene Oyj (HEL:UPM). The company's stock led the HLSE gainers with a relatively large price hike in the past couple of weeks. As a large-cap 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? Today I will analyse the most recent data on UPM-Kymmene Oyj’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for UPM-Kymmene Oyj

What is UPM-Kymmene Oyj worth?

Good news, investors! UPM-Kymmene Oyj is still a bargain right now. According to my valuation, the intrinsic value for the stock is €43.15, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, UPM-Kymmene Oyj’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of UPM-Kymmene Oyj look like?

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. 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 22% over the next couple of years, the future seems bright for UPM-Kymmene Oyj. 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? Since UPM is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on UPM for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy UPM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

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

If you are no longer interested in UPM-Kymmene Oyj, 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.