When Should You Buy Landi Renzo S.p.A. (BIT:LR)?

Landi Renzo S.p.A. (BIT:LR), might not be a large cap stock, but it led the BIT gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Landi Renzo’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Landi Renzo

What is Landi Renzo worth?

According to my valuation model, Landi Renzo seems to be fairly priced at around 3.52% above my intrinsic value, which means if you buy Landi Renzo today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth €0.93, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Landi Renzo’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 Landi Renzo?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With revenues expected to grow by a double-digit 18% over the next couple of years, the outlook is positive for Landi Renzo. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in LR’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on LR, now may not be the most optimal 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 want to dive deeper into Landi Renzo, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Landi Renzo and you'll want to know about it.

If you are no longer interested in Landi Renzo, 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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