While Alfa, S. A. B. de C. V. (BMV:ALFAA) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the BMV, rising to highs of Mex$16.99 and falling to the lows of Mex$12.03. 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 Alfa S. A. B. de C. V's current trading price of Mex$12.35 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 Alfa S. A. B. de C. V’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 Alfa S. A. B. de C. V
Is Alfa S. A. B. de C. V still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.68% above my intrinsic value, which means if you buy Alfa S. A. B. de C. V today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is MX$10.86, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Alfa S. A. B. de C. V’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Alfa S. A. B. de C. V?
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. Though in the case of Alfa S. A. B. de C. V, it is expected to deliver a negative earnings growth of -13%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, ALFA A 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 ALFA A for a while, now may not be the most optimal 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 ALFA A 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. Our analysis shows 4 warning signs for Alfa S. A. B. de C. V (1 can't be ignored!) and we strongly recommend you look at them before investing.
If you are no longer interested in Alfa S. A. B. de C. V, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
When trading Alfa S. A. B. de C. V or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
About BMV:ALFA A
Alfa. de
Engages in the petrochemical and synthetic fiber and refrigerated food businesses in Mexico.
Very undervalued with moderate growth potential.
