Is There Now An Opportunity In Interpump Group S.p.A. (BIT:IP)?

By
Simply Wall St
Published
September 28, 2021
BIT:IP
Source: Shutterstock

While Interpump Group S.p.A. (BIT:IP) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the BIT. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Interpump Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Interpump Group

What is Interpump Group worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Interpump Group’s ratio of 25.16x is trading slightly above its industry peers’ ratio of 24.93x, which means if you buy Interpump Group today, you’d be paying a relatively sensible price for it. And if you believe Interpump Group should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Interpump Group’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 kind of growth will Interpump Group generate?

earnings-and-revenue-growth
BIT:IP Earnings and Revenue Growth September 29th 2021

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 profit expected to grow by a double-digit 11% over the next couple of years, the outlook is positive for Interpump Group. 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 IP’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at IP? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on IP, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for IP, 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Interpump Group has 1 warning sign we think you should be aware of.

If you are no longer interested in Interpump 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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