Should You Investigate MITSUI E&S Co., Ltd. (TSE:7003) At JP¥2,623?

MITSUI E&S Co., Ltd. (TSE:7003), is not the largest company out there, but it saw a significant share price rise of 115% in the past couple of months on the TSE. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on MITSUI E&S’s outlook and valuation to see if the opportunity still exists.

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Is MITSUI E&S Still Cheap?

According to our valuation model, MITSUI E&S seems to be fairly priced at around 3.8% below our intrinsic value, which means if you buy MITSUI E&S today, you’d be paying a fair price for it. And if you believe that the stock is really worth ¥2726.10, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, MITSUI E&S’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Check out our latest analysis for MITSUI E&S

What does the future of MITSUI E&S look like?

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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for MITSUI E&S, at least in the near future.

What This Means For You

Are you a shareholder? Currently, 7003 appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 7003 for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on 7003 should the price fluctuate below its true value.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 3 warning signs for MITSUI E&S (2 are a bit unpleasant!) that we believe deserve your full attention.

If you are no longer interested in MITSUI E&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.