Is It Time To Consider Buying LAMDA Development S.A. (ATH:LAMDA)?

While LAMDA Development S.A. (ATH:LAMDA) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the ATSE. The company's trading levels have approached the yearly peak, following the recent bounce in the share price. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at LAMDA Development’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for LAMDA Development

Is LAMDA Development Still Cheap?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that LAMDA Development’s ratio of 25.44x is trading slightly above its industry peers’ ratio of 24.77x, which means if you buy LAMDA Development today, you’d be paying a relatively sensible price for it. And if you believe that LAMDA Development should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. In addition to this, it seems like LAMDA Development’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from LAMDA Development?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. In LAMDA Development's case, its earnings over the next year are expected to double, indicating an incredibly optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in LAMDA’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at LAMDA? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on LAMDA, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for LAMDA, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about LAMDA Development as a business, it's important to be aware of any risks it's facing. When we did our research, we found 2 warning signs for LAMDA Development (1 shouldn't be ignored!) that we believe deserve your full attention.

If you are no longer interested in LAMDA Development, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com