Is Now The Time To Look At Buying STMicroelectronics N.V. (EPA:STM)?

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Let’s talk about the popular STMicroelectronics N.V. (EPA:STM). The company’s shares saw significant share price movement during recent months on the ENXTPA, rising to highs of €16.84 and falling to the lows of €12.73. 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 STMicroelectronics’s current trading price of €13.7 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 STMicroelectronics’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 STMicroelectronics

What is STMicroelectronics worth?

Good news, investors! STMicroelectronics is still a bargain right now. My valuation model shows that the intrinsic value for the stock is €25.36, but it is currently trading at €13.70 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, STMicroelectronics’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 STMicroelectronics generate?

ENXTPA:STM Past and Future Earnings, June 3rd 2019
ENXTPA:STM Past and Future Earnings, June 3rd 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. STMicroelectronics’s earnings over the next few years are expected to increase by 24%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since STM is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on STM for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy STM. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on STMicroelectronics. You can find everything you need to know about STMicroelectronics in the latest infographic research report. If you are no longer interested in STMicroelectronics, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.