Is It Too Late To Consider Buying Public Power Corporation S.A. (ATH:PPC)?

Public Power Corporation S.A. (ATH:PPC), is not the largest company out there, but it received a lot of attention from a substantial price increase on the ATSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Public Power’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Public Power

What's the opportunity in Public Power?

Great news for investors – Public Power is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is €9.76, but it is currently trading at €7.37 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 Public Power’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 Public Power?

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. However, with an expected decline of -14% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Public Power. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although PPC is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to PPC, 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 PPC for some time, but hesitant on making the leap, I recommend you dig deeper 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.

If you want to dive deeper into Public Power, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Public Power you should be aware of.

If you are no longer interested in Public Power, 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. 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.
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