Stock Analysis

Is Now An Opportune Moment To Examine Semapa - Sociedade de Investimento e Gestão, SGPS, S.A. (ELI:SEM)?

ENXTLS:SEM
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Semapa - Sociedade de Investimento e Gestão, SGPS, S.A. (ELI:SEM), is not the largest company out there, but it saw its share price hover around a small range of €11.40 to €12.48 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Semapa - Sociedade de Investimento e Gestão SGPS’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 Semapa - Sociedade de Investimento e Gestão SGPS

Is Semapa - Sociedade de Investimento e Gestão SGPS still cheap?

Great news for investors – Semapa - Sociedade de Investimento e Gestão SGPS is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Semapa - Sociedade de Investimento e Gestão SGPS’s ratio of 6.29x is below its peer average of 13.71x, which indicates the stock is trading at a lower price compared to the Forestry industry. Although, there may be another chance to buy again in the future. This is because Semapa - Sociedade de Investimento e Gestão SGPS’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Semapa - Sociedade de Investimento e Gestão SGPS look like?

earnings-and-revenue-growth
ENXTLS:SEM Earnings and Revenue Growth February 10th 2022

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 -17% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Semapa - Sociedade de Investimento e Gestão SGPS. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although SEM is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to SEM, 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 SEM 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 while earnings quality is important, it's equally important to consider the risks facing Semapa - Sociedade de Investimento e Gestão SGPS at this point in time. For example, we've found that Semapa - Sociedade de Investimento e Gestão SGPS has 3 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.

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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.

About ENXTLS:SEM

Semapa - Sociedade de Investimento e Gestão SGPS

Through its subsidiaries, produces and sells uncoated woodfree (UWF) printing and writing paper in Portugal, rest of Europe, the United States, Africa, Asia, and Oceania.

Undervalued with proven track record and pays a dividend.