Today we're going to take a look at the well-established Edenred SA (EPA:EDEN). The company's stock received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €46.37 at one point, and dropping to the lows of €41.60. 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 Edenred's current trading price of €44.64 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 Edenred’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Edenred still cheap?
According to my valuation model, Edenred seems to be fairly priced at around 5.37% above my intrinsic value, which means if you buy Edenred today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €42.36, there’s only an insignificant downside when the price falls to its real value. What's more, Edenred’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Edenred?
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. With profit expected to grow by 62% over the next couple of years, the future seems bright for Edenred. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in EDEN’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on EDEN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Edenred. You can find everything you need to know about Edenred in the latest infographic research report. If you are no longer interested in Edenred, 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 firstname.lastname@example.org. 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.
Valuation is complex, but we're helping make it simple.
Find out whether Edenred is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis