Is It Time To Consider Buying Arkema S.A. (EPA:AKE)?

While Arkema S.A. (EPA:AKE) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the ENXTPA over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Arkema’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Arkema

Is Arkema Still Cheap?

Great news for investors – Arkema is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €132.73, but it is currently trading at €91.88 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Arkema’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

What kind of growth will Arkema 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 -16% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Arkema. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although AKE is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to AKE, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on AKE for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Arkema, you'd also look into what risks it is currently facing. When we did our research, we found 3 warning signs for Arkema (1 shouldn't be ignored!) that we believe deserve your full attention.

If you are no longer interested in Arkema, 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.