What Is PCC Rokita SA's (WSE:PCR) Share Price Doing?

While PCC Rokita SA (WSE:PCR) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the WSE over the last few months, increasing to zł102 at one point, and dropping to the lows of zł83.00. 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 PCC Rokita's current trading price of zł83.00 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 PCC Rokita’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for PCC Rokita

What is PCC Rokita worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.9% below my intrinsic value, which means if you buy PCC Rokita today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth PLN88.18, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that PCC Rokita’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of PCC Rokita look like?

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. Though in the case of PCC Rokita, it is expected to deliver a highly negative earnings growth in the next few years, 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, PCR 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 optimal 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 PCR for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears 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 crystalize your views on PCR should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing PCC Rokita at this point in time. To help with this, we've discovered 3 warning signs (1 doesn't sit too well with us!) that you ought to be aware of before buying any shares in PCC Rokita.

If you are no longer interested in PCC Rokita, 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.