When Should You Buy Prysmian S.p.A. (BIT:PRY)?

While Prysmian S.p.A. (BIT:PRY) 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 €31.53 at one point, and dropping to the lows of €27.71. 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 Prysmian's current trading price of €28.55 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 Prysmian’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 Prysmian

What is Prysmian worth?

Prysmian appears to be overvalued by 30% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €28.55 on the market compared to my intrinsic value of €22.01. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Prysmian’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 kind of growth will Prysmian generate?

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. Prysmian's earnings over the next few years are expected to increase by 35%, 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 well and truly priced in PRY’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 PRY 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 PRY 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 PRY, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Prysmian as a business, it's important to be aware of any risks it's facing. To help with this, we've discovered 2 warning signs (1 is concerning!) that you ought to be aware of before buying any shares in Prysmian.

If you are no longer interested in Prysmian, 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.