Should You Think About Buying Vesuvius plc (LON:VSVS) Now?

Vesuvius plc (LON:VSVS), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£4.35 at one point, and dropping to the lows of UK£3.86. 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 Vesuvius' current trading price of UK£4.06 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 Vesuvius’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 Vesuvius

Is Vesuvius Still Cheap?

Great news for investors – Vesuvius is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is £5.47, but it is currently trading at UK£4.06 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Vesuvius’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 Vesuvius?

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 extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Vesuvius, at least in the near future.

What This Means For You

Are you a shareholder? Although VSVS 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 VSVS, 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 VSVS 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. When we did our research, we found 2 warning signs for Vesuvius (1 doesn't sit too well with us!) that we believe deserve your full attention.

If you are no longer interested in Vesuvius, 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.