At €5.64, Is Derichebourg SA (EPA:DBG) Worth Looking At Closely?

Derichebourg SA (EPA:DBG), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €6.85 at one point, and dropping to the lows of €5.19. 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 Derichebourg's current trading price of €5.64 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Derichebourg’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 Derichebourg

What Is Derichebourg Worth?

According to my valuation model, Derichebourg seems to be fairly priced at around 18% below my intrinsic value, which means if you buy Derichebourg today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €6.88, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Derichebourg’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Derichebourg?

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. 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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Derichebourg, at least in the near future.

What This Means For You

Are you a shareholder? DBG 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 DBG for a while, now may not be the most advantageous 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. In addition to this, 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 DBG should the price fluctuate below its true value.

If you want to dive deeper into Derichebourg, you'd also look into what risks it is currently facing. To that end, you should learn about the 3 warning signs we've spotted with Derichebourg (including 1 which is potentially serious).

If you are no longer interested in Derichebourg, 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.