What Does Vivendi SE's (EPA:VIV) Share Price Indicate?

Let's talk about the popular Vivendi SE (EPA:VIV). The company's shares saw significant share price movement during recent months on the ENXTPA, rising to highs of €33.41 and falling to the lows of €10.50. 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 Vivendi's current trading price of €11.33 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Vivendi’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Vivendi

What is Vivendi worth?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 Vivendi’s ratio of 10.15x is trading slightly below its industry peers’ ratio of 14.83x, which means if you buy Vivendi today, you’d be paying a decent price for it. And if you believe Vivendi should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, Vivendi’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will Vivendi 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 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 Vivendi, at least in the near future.

What this means for you:

Are you a shareholder? VIV 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 optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on VIV, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on VIV 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. 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 VIV should the price fluctuate below the industry PE ratio.

So while earnings quality is important, it's equally important to consider the risks facing Vivendi at this point in time. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of Vivendi.

If you are no longer interested in Vivendi, 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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