Is It Time To Consider Buying TOD'S S.p.A. (BIT:TOD)?

While TOD'S S.p.A. (BIT:TOD) 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 stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at TOD'S’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for TOD'S

Is TOD'S Still Cheap?

TOD'S is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. 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 TOD'S’s ratio of 72.16x is above its peer average of 21.48x, which suggests the stock is trading at a higher price compared to the Luxury industry. Furthermore, TOD'S’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will TOD'S generate?

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. TOD'S' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 TOD’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe TOD should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 TOD for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for TOD, 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 TOD'S as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for TOD'S you should know about.

If you are no longer interested in TOD'S, 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.