Is There Now An Opportunity In Smurfit Kappa Group Plc (ISE:SK3)?

Smurfit Kappa Group Plc (ISE:SK3) saw a significant share price rise of over 20% in the past couple of months on the ISE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Smurfit Kappa Group’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Smurfit Kappa Group

Is Smurfit Kappa Group Still Cheap?

Great news for investors – Smurfit Kappa Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €54.30, but it is currently trading at €37.99 on the share market, meaning that there is still an opportunity to buy now. Smurfit Kappa Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Smurfit Kappa Group?

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 -4.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Smurfit Kappa Group. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although SK3 is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to SK3, 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 an eye on SK3 for a while, 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.

If you'd like to know more about Smurfit Kappa Group as a business, it's important to be aware of any risks it's facing. For instance, we've identified 4 warning signs for Smurfit Kappa Group (1 is a bit unpleasant) you should be familiar with.

If you are no longer interested in Smurfit Kappa Group, 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.