Should You Investigate Grupa Azoty S.A. (WSE:ATT) At zł41.54?

Grupa Azoty S.A. (WSE:ATT), is not the largest company out there, but it received a lot of attention from a substantial price movement on the WSE over the last few months, increasing to zł54.35 at one point, and dropping to the lows of zł38.96. 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 Grupa Azoty's current trading price of zł41.54 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 Grupa Azoty’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 Grupa Azoty

Is Grupa Azoty Still Cheap?

Good news, investors! Grupa Azoty is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 3.06x is currently well-below the industry average of 8.55x, meaning that it is trading at a cheaper price relative to its peers. Grupa Azoty’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 industry peers, 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.

Can we expect growth from Grupa Azoty?

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. However, with a negative profit growth of -5.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Grupa Azoty. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although ATT is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to ATT, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on ATT for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Grupa Azoty (including 1 which is significant).

If you are no longer interested in Grupa Azoty, 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.