At €2.20, Is Banca Monte dei Paschi di Siena SpA (BIT:BMPS) A Buy?

Banca Monte dei Paschi di Siena SpA (BIT:BMPS), operating in the financial services industry based in Italy, saw significant share price volatility over the past couple of months on the BIT, rising to the highs of €3.21 and falling to the lows of €2.2. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Banca Monte dei Paschi di Siena's current trading price of €2.2 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 Banca Monte dei Paschi di Siena’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Banca Monte dei Paschi di Siena

Is Banca Monte dei Paschi di Siena still cheap?

According to my valuation model, the stock is currently overvalued by about 23.45%, trading at €2.20 compared to my intrinsic value of €1.79. This means that the opportunity to buy Banca Monte dei Paschi di Siena at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Banca Monte dei Paschi di Siena’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 Banca Monte dei Paschi di Siena?

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. 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 profit expected to more than double over the next couple of years, the future seems bright for Banca Monte dei Paschi di Siena. 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? BMPS’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BMPS 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 an eye on BMPS for a while, 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 optimistic prospect is encouraging for BMPS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Banca Monte dei Paschi di Siena. You can find everything you need to know about Banca Monte dei Paschi di Siena in the latest infographic research report. If you are no longer interested in Banca Monte dei Paschi di Siena, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.