At €107, Is It Time To Put Vinci SA (EPA:DG) On Your Watch List?

Vinci SA (EPA:DG) had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of €102 to €112. However, is this the true valuation level of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Vinci’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Vinci

What Is Vinci Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.1% below my intrinsic value, which means if you buy Vinci today, you’d be paying a fair price for it. And if you believe that the stock is really worth €111.22, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Vinci’s low beta implies that the stock is less volatile than the wider market.

What does the future of Vinci 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. With profit expected to grow by 23% over the next couple of years, the future seems bright for Vinci. 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? DG’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 track record of its management team. 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 tabs on DG, now may not be the most optimal 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 Vinci at this point in time. While conducting our analysis, we found that Vinci has 2 warning signs and it would be unwise to ignore these.

If you are no longer interested in Vinci, 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.