Is CTT - Correios De Portugal, S.A. (ELI:CTT) Potentially Undervalued?

While CTT - Correios De Portugal, S.A. (ELI:CTT) might not have the largest market cap around , it saw a significant share price rise of 64% in the past couple of months on the ENXTLS. The recent jump in the share price has meant that the company is trading at close to its 52-week high. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine CTT - Correios De Portugal’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for CTT - Correios De Portugal

What's The Opportunity In CTT - Correios De Portugal?

CTT - Correios De Portugal is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that CTT - Correios De Portugal’s ratio of 19.11x is above its peer average of 15.13x, which suggests the stock is trading at a higher price compared to the Logistics industry. Another thing to keep in mind is that CTT - Correios De Portugal’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

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Can we expect growth from CTT - Correios De Portugal?

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. CTT - Correios De Portugal's earnings over the next few years are expected to increase by 33%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? CTT’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe CTT should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. 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 CTT for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for CTT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for CTT - Correios De Portugal from their most recent forecasts. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in CTT - Correios De Portugal, 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.