Should You Think About Buying ACEA S.p.A. (BIT:ACE) Now?

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 €14.42 and falling to the lows of €12.28. 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 €13.40 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.

View our latest analysis for ACEA

What Is ACEA Worth?

ACEA appears to be overvalued by 31% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €13.40 on the market compared to my intrinsic value of €10.25. Not the best news for investors looking to buy! Furthermore, ACEA’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 its true value, 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 ACEA generate?

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 a double-digit 10% 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? ACE’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ACE 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 ACE 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 positive outlook is encouraging for ACE, 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 ACEA as a business, it's important to be aware of any risks it's facing. Our analysis shows 3 warning signs for ACEA (1 doesn't sit too well with us!) and we strongly recommend you look at them before investing.

If you are no longer interested in ACEA, 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.