At UK£1.14, Is Sirius Real Estate Limited (LON:SRE) Worth Looking At Closely?

Sirius Real Estate Limited (LON:SRE), is not the largest company out there, but it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£1.35 at one point, and dropping to the lows of UK£1.09. 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 Sirius Real Estate's current trading price of UK£1.14 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 Sirius Real Estate’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Sirius Real Estate

What is Sirius Real Estate worth?

Sirius Real Estate appears to be overvalued by 28% at the moment, based on my discounted cash flow valuation. The stock is currently priced at UK£1.14 on the market compared to my intrinsic value of £0.89. Not the best news for investors looking to buy! In addition to this, it seems like Sirius Real Estate’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 Sirius Real Estate 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. However, with a negative profit growth of -13% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Sirius Real Estate. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? If you believe SRE is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. 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 SRE for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. When we did our research, we found 5 warning signs for Sirius Real Estate (2 shouldn't be ignored!) that we believe deserve your full attention.

If you are no longer interested in Sirius Real Estate, 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.