Should You Investigate Pepco Group N.V. (WSE:PCO) At zł16.70?

While Pepco Group N.V. (WSE:PCO) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the WSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Pepco Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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What Is Pepco Group Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 17% below our intrinsic value, which means if you buy Pepco Group today, you’d be paying a fair price for it. And if you believe the company’s true value is PLN20.01, 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 Pepco Group’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.

View our latest analysis for Pepco Group

What does the future of Pepco Group look like?

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. However, with a relatively muted revenue growth of 7.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Pepco Group, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in PCO’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 an eye on PCO, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Pepco Group has 1 warning sign we think you should be aware of.

If you are no longer interested in Pepco Group, 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.