Is It Too Late To Consider Buying Brembo S.p.A. (BIT:BRE)?

While Brembo S.p.A. (BIT:BRE) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the BIT over the last few months, increasing to €13.33 at one point, and dropping to the lows of €10.10. 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 Brembo's current trading price of €10.10 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Brembo’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Brembo

What Is Brembo Worth?

According to my valuation model, Brembo seems to be fairly priced at around 9.4% below my intrinsic value, which means if you buy Brembo today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €11.15, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Brembo’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

What does the future of Brembo look like?

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. Brembo's earnings over the next few years are expected to increase by 25%, indicating a highly optimistic future ahead. This should lead to more robust 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 BRE’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on BRE, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining 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 Brembo as a business, it's important to be aware of any risks it's facing. For example - Brembo has 1 warning sign we think you should be aware of.

If you are no longer interested in Brembo, 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.