While Safilo Group S.p.A. (BIT:SFL) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the BIT. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Safilo Group’s outlook and valuation to see if the opportunity still exists.
What's the opportunity in Safilo Group?
According to my valuation model, the stock is currently overvalued by about 33%, trading at €1.44 compared to my intrinsic value of €1.09. This means that the opportunity to buy Safilo Group at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Safilo Group’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 Safilo Group?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 62% over the next couple of years, the future seems bright for Safilo 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 well and truly priced in SFL’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 SFL 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 SFL 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 SFL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Safilo Group, you'd also look into what risks it is currently facing. When we did our research, we found 3 warning signs for Safilo Group (1 is concerning!) that we believe deserve your full attention.
If you are no longer interested in Safilo Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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.