Infotel SA (EPA:INF), is not the largest company out there, but it received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €40.70 at one point, and dropping to the lows of €35.60. 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 Infotel's current trading price of €38.90 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?
The stock is currently trading at €38.90 on the share market, which means it is overvalued by 26% compared to my intrinsic value of €30.81. This means that the buying opportunity has probably disappeared for now. 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.
What kind of growth will Infotel generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. With profit expected to grow by 28% 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? It seems like the market has well and truly priced in INF’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to 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 tabs on INF for some time, 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 optimistic prospect is encouraging for INF, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 1 warning sign for Infotel and you'll want to know about this.
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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.
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About ENXTPA:INF
Infotel
Designs, develops, markets, and maintains software solutions in the areas of security, performance, and management worldwide.
Excellent balance sheet, good value and pays a dividend.
