Is Posco International Corporation (KRX:047050) Potentially Undervalued?

Posco International Corporation (KRX:047050), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the KOSE over the last few months, increasing to ₩15,000 at one point, and dropping to the lows of ₩12,950. 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 Posco International's current trading price of ₩12,950 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Posco International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Posco International

What is Posco International worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.4% below my intrinsic value, which means if you buy Posco International today, you’d be paying a fair price for it. And if you believe that the stock is really worth ₩14132.62, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Posco International’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Posco International?

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. Posco International's earnings over the next few years are expected to increase by 56%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? A047050’s optimistic future growth appears to have been factored into the current share price, 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on A047050, now may not be the most optimal 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Posco International, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Posco International and you'll want to know about these.

If you are no longer interested in Posco International, 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. 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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