When Should You Buy Rexel S.A. (EPA:RXL)?

Rexel S.A. (EPA:RXL), is not the largest company out there, but it received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €24.77 at one point, and dropping to the lows of €18.44. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Rexel's current trading price of €19.41 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Rexel’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Rexel

What Is Rexel Worth?

According to my valuation model, Rexel seems to be fairly priced at around 19% below my intrinsic value, which means if you buy Rexel today, you’d be paying a fair price for it. And if you believe that the stock is really worth €23.96, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Rexel’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Rexel generate?

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. However, with a negative profit growth of -9.6% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Rexel. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? RXL seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 RXL 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 gel your views on RXL should the price fluctuate below its true value.

If you want to dive deeper into Rexel, you'd also look into what risks it is currently facing. For example, Rexel has 2 warning signs (and 1 which is concerning) we think you should know about.

If you are no longer interested in Rexel, 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.