Is Altri, SGPS, S.A. (ELI:ALTR) Potentially Undervalued?

Altri, SGPS, S.A. (ELI:ALTR), is not the largest company out there, but it saw significant share price movement during recent months on the ENXTLS, rising to highs of €4.58 and falling to the lows of €4.11. 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 Altri SGPS' current trading price of €4.25 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 Altri SGPS’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 Altri SGPS

What's The Opportunity In Altri SGPS?

According to my valuation model, Altri SGPS seems to be fairly priced at around 6.79% above my intrinsic value, which means if you buy Altri SGPS today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is €3.98, 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 Altri SGPS’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.

What kind of growth will Altri SGPS generate?

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Altri SGPS, at least in the near future.

What This Means For You

Are you a shareholder? Currently, ALTR 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 ALTR for a while, now may not be the most optimal 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 ALTR should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Altri SGPS at this point in time. To help with this, we've discovered 3 warning signs (1 is a bit concerning!) that you ought to be aware of before buying any shares in Altri SGPS.

If you are no longer interested in Altri SGPS, 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.