Voyageurs du Monde SA (EPA:ALVDM), is not the largest company out there, but it led the ENXTPA gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, which tends to lack high analyst coverage, 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? Let’s examine Voyageurs du Monde’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Voyageurs du Monde
Is Voyageurs du Monde still cheap?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Voyageurs du Monde’s ratio of 20.44x is trading in-line with its industry peers’ ratio, which means if you buy Voyageurs du Monde today, you’d be paying a relatively reasonable price for it. So, is there another chance to buy low in the future? Given that Voyageurs du Monde’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.
Can we expect growth from Voyageurs du Monde?
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. Though in the case of Voyageurs du Monde, it is expected to deliver a negative earnings growth of -16%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? ALVDM seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on ALVDM, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on ALVDM for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This 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 ALVDM should the price fluctuate below the industry PE ratio.
If you'd like to know more about Voyageurs du Monde as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Voyageurs du Monde and we think they deserve your attention.
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This article by Simply Wall St is general in nature. 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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About ENXTPA:ALVDM
Voyageurs du Monde
Operates as a travel agency in France and internationally.
Undervalued with excellent balance sheet.
