What Is Rosseti, Public Joint Stock Company's (MCX:RSTI) Share Price Doing?

Rosseti, Public Joint Stock Company (MCX:RSTI), is not the largest company out there, but it received a lot of attention from a substantial price movement on the MISX over the last few months, increasing to ₽1.53 at one point, and dropping to the lows of ₽1.35. 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 Rosseti's current trading price of ₽1.37 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Rosseti’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 Rosseti

What's the opportunity in Rosseti?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.26x is currently trading slightly below its industry peers’ ratio of 7.59x, which means if you buy Rosseti today, you’d be paying a decent price for it. And if you believe that Rosseti should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Rosseti’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will Rosseti generate?

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. With profit expected to more than double over the next couple of years, the future seems bright for Rosseti. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? RSTI’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 RSTI? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on RSTI, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for RSTI, which 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.

If you'd like to know more about Rosseti as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Rosseti you should be aware of.

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

When trading Rosseti or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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