Should You Investigate Citycon Oyj (HEL:CTY1S) At €5.45?

Citycon Oyj (HEL:CTY1S), might not be a large cap stock, but it saw a decent share price growth in the teens level on the HLSE over the last few months. As a small cap stock, hardly covered by any analysts, 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 Citycon Oyj’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Citycon Oyj

What's The Opportunity In Citycon Oyj?

According to my valuation model, Citycon Oyj seems to be fairly priced at around 12% below my intrinsic value, which means if you buy Citycon Oyj today, you’d be paying a fair price for it. And if you believe that the stock is really worth €6.21, then there’s not much of an upside to gain from mispricing. Furthermore, Citycon Oyj’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Citycon Oyj?

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 revenues expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Citycon Oyj. If the level of expenses is able to be maintained, 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? CTY1S’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on CTY1S, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Citycon Oyj at this point in time. Case in point: We've spotted 2 warning signs for Citycon Oyj you should be mindful of and 1 of these is concerning.

If you are no longer interested in Citycon 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.