Why Public Power Corporation S.A. (ATH:PPC) Could Be Worth Watching

Public Power Corporation S.A. (ATH:PPC), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the ATSE. As a €3.7b market-cap stock, it seems odd Public Power is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Public Power’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Public Power

What Is Public Power Worth?

Public Power is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Public Power’s ratio of 16.45x is above its peer average of 8.62x, which suggests the stock is trading at a higher price compared to the Electric Utilities industry. But, is there another opportunity to buy low in the future? Since Public Power’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Public Power?

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 relatively muted profit growth of 6.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Public Power, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in PPC’s outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe PPC should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. 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 PPC for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 3 warning signs for Public Power (of which 1 can't be ignored!) you should know about.

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. 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.