At €14.90, Is It Time To Put Engie SA (EPA:ENGI) On Your Watch List?

Engie SA (EPA:ENGI) received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €15.47 at one point, and dropping to the lows of €13.90. 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 Engie's current trading price of €14.90 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 Engie’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Engie

Is Engie Still Cheap?

Great news for investors – Engie is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €22.19, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Engie’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Engie?

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 an expected decline of -7.0% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Engie. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although ENGI is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to ENGI, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on ENGI for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So while earnings quality is important, it's equally important to consider the risks facing Engie at this point in time. Every company has risks, and we've spotted 1 warning sign for Engie you should know about.

If you are no longer interested in Engie, 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.