At €36.18, Is Bouygues SA (EPA:EN) Worth Looking At Closely?

Let's talk about the popular Bouygues SA (EPA:EN). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the ENXTPA. 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. However, what if the stock is still a bargain? Let’s take a look at Bouygues’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Bouygues

What's the opportunity in Bouygues?

According to my valuation model, the stock is currently overvalued by about 24%, trading at €36.18 compared to my intrinsic value of €29.21. This means that the opportunity to buy Bouygues at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Bouygues’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Bouygues?

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. However, with a negative profit growth of -4.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Bouygues. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? If you believe EN is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on EN for some time, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?

If you'd like to know more about Bouygues as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Bouygues, and understanding this should be part of your investment process.

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

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.

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