Is It Too Late To Consider Buying Rovio Entertainment Oyj (HEL:ROVIO)?

While Rovio Entertainment Oyj (HEL:ROVIO) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the HLSE over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Rovio Entertainment Oyj’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Rovio Entertainment Oyj

What's the opportunity in Rovio Entertainment Oyj?

According to my valuation model, Rovio Entertainment Oyj seems to be fairly priced at around 16% below my intrinsic value, which means if you buy Rovio Entertainment Oyj today, you’d be paying a fair price for it. And if you believe that the stock is really worth €8.94, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Rovio Entertainment Oyj has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Rovio Entertainment Oyj generate?

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. Though in the case of Rovio Entertainment Oyj, it is expected to deliver a negative earnings growth of -1.8%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? ROVIO seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ROVIO for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on ROVIO should the price fluctuate below its true value.

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. To that end, you should learn about the 2 warning signs we've spotted with Rovio Entertainment Oyj (including 1 which can't be ignored).

If you are no longer interested in Rovio Entertainment 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. 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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