A2A (BIT:A2A) Valuation Check After Completing Its Latest Share Buyback Program

A2A (BIT:A2A) has just wrapped up its latest share buyback, adding more than two million treasury shares in early December, which some investors may view as a signal of management’s confidence in its balance sheet and future cash flows.

See our latest analysis for A2A.

That capital return push comes after a choppier spell for the stock, with a 30 day share price return of minus 16.35 percent but a 3 year total shareholder return of 102.97 percent, suggesting that longer term momentum is still very much intact.

If this kind of steady utility story has you thinking about portfolio balance, it could be worth exploring other regulated names alongside A2A by screening for healthcare stocks.

With shares down over the past month but still ahead over three and five years, and analysts seeing upside to the current price, is A2A quietly undervalued right now, or is the market already pricing in its future growth?

Most Popular Narrative Narrative: 15% Undervalued

With A2A last closing at €2.27 against a narrative fair value of about €2.67, the most followed view sees upside even with muted growth.

The analysts are assuming A2A's revenue will decrease by 2.0% annually over the next 3 years. Analysts assume that profit margins will shrink from 6.0% today to 5.4% in 3 years time.

Read the complete narrative.

Curious how a shrinking top line and thinner margins can still justify a richer earnings multiple in a regulated utility, and why that could reshape A2A's long term valuation story?

Result: Fair Value of €2.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, regulatory decisions on concessions and A2A's heavy reliance on aggressive CapEx could quickly undermine margins and the case for a higher earnings multiple.

Find out about the key risks to this A2A narrative.

Another Lens on Value

While the narrative points to upside based on future earnings and margins, our DCF model is far more cautious. It puts fair value closer to €0.91 per share, which suggests A2A could actually be overvalued at current prices. Which story do you think better reflects reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out A2A for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 905 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own A2A Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your A2A research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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