Should You Investigate PlayWay S.A. (WSE:PLW) At zł248?

PlayWay S.A. (WSE:PLW), 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 zł438 at one point, and dropping to the lows of zł248. 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 PlayWay's current trading price of zł248 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 PlayWay’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 PlayWay

Is PlayWay still cheap?

According to my valuation model, the stock is currently overvalued by about 21%, trading at zł248 compared to my intrinsic value of PLN204.47. This means that the buying opportunity has probably disappeared for now. Furthermore, PlayWay’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 true value, 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 PlayWay?

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 a negative profit growth of -7.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for PlayWay. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? If you believe PLW should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on PLW for some time, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. In terms of investment risks, we've identified 4 warning signs with PlayWay, and understanding these should be part of your investment process.

If you are no longer interested in PlayWay, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.