ACEA S.p.A. (BIT:ACE), might not be a large cap stock, but it saw significant share price movement during recent months on the BIT, rising to highs of €21.30 and falling to the lows of €18.95. 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 ACEA's current trading price of €20.22 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 ACEA’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for ACEA
Is ACEA still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% below my intrinsic value, which means if you buy ACEA today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €24.32, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, ACEA’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of ACEA look like?
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 15% over the next couple of years, the outlook is positive for ACEA. 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 ACE’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on ACE, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing ACEA at this point in time. For example, we've found that ACEA has 2 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.
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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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About BIT:ACE
Solid track record, good value and pays a dividend.
