Is Infotel SA (EPA:INF) Potentially Undervalued?

Infotel SA (EPA:INF), is not the largest company out there, but it saw significant share price movement during recent months on the ENXTPA, rising to highs of €43.50 and falling to the lows of €38.20. 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 Infotel's current trading price of €41.50 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Infotel’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 Infotel

Is Infotel still cheap?

According to my valuation model, the stock is currently overvalued by about 26%, trading at €41.50 compared to my intrinsic value of €33.00. Not the best news for investors looking to buy! In addition to this, it seems like Infotel’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Infotel?

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 25% over the next couple of years, the future seems bright for Infotel. 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? INF’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe INF should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on INF for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for INF, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Infotel as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Infotel you should know about.

If you are no longer interested in Infotel, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

When trading Infotel or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.