Is STEF SA (EPA:STF) Potentially Undervalued?

STEF SA (EPA:STF), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the ENXTPA. The recent share price gains has brought the company back closer to its yearly peak. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine STEF’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for STEF

What's The Opportunity In STEF?

Great news for investors – STEF is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is €199.37, but it is currently trading at €131 on the share market, meaning that there is still an opportunity to buy now. STEF’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will STEF 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. 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. However, with a relatively muted profit growth of 9.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for STEF, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since STF is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

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

If you'd like to know more about STEF as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for STEF you should know about.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.