While Pirelli & C. S.p.A. (BIT:PIRC) might not have the largest market cap around , it saw significant share price movement during recent months on the BIT, rising to highs of €6.23 and falling to the lows of €5.51. 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 Pirelli & C's current trading price of €5.76 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 Pirelli & C’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Pirelli & C
What's The Opportunity In Pirelli & C?
According to our valuation model, the stock is currently overvalued by about 31%, trading at €5.76 compared to our intrinsic value of €4.40. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Pirelli & C’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Pirelli & C 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. With profit expected to grow by 36% over the next couple of years, the future seems bright for Pirelli & C. 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 well and truly priced in PIRC’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe PIRC should trade below its current price, selling high and buying it back up again when its price falls towards its real value 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 PIRC for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for PIRC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Pirelli & C has 3 warning signs we think you should be aware of.
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
About BIT:PIRC
Pirelli & C
Manufactures and supplies tires for cars, motorcycles, and bicycles worldwide.
Adequate balance sheet and fair value.
