Should You Investigate Aeroports de Paris SA (EPA:ADP) At €104?

Let's talk about the popular Aeroports de Paris SA (EPA:ADP). The company's shares saw a significant share price rise of over 20% in the past couple of months on the ENXTPA. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Aeroports de Paris’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Aeroports de Paris

What's the opportunity in Aeroports de Paris?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15.39% above my intrinsic value, which means if you buy Aeroports de Paris today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €90.30, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Aeroports de Paris’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Aeroports de Paris?

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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Aeroports de Paris, at least in the near future.

What this means for you:

Are you a shareholder? ADP seems fairly priced 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 the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ADP for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which 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 crystalize your views on ADP should the price fluctuate below its true value.

If you want to dive deeper into Aeroports de Paris, you'd also look into what risks it is currently facing. For example, we've found that Aeroports de Paris has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

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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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