What Is Eolus Vind AB (publ)'s (STO:EOLU B) Share Price Doing?

While Eolus Vind AB (publ) (STO:EOLU B) might not be the most widely known stock at the moment, it led the OM gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present 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 take a look at Eolus Vind’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out the opportunities and risks within the SE Construction industry.

Is Eolus Vind Still Cheap?

According to my valuation model, Eolus Vind seems to be fairly priced at around 20% below my intrinsic value, which means if you buy Eolus Vind today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth SEK153.31, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Eolus Vind’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 kind of growth will Eolus Vind 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. In Eolus Vind's case, its revenues over the next few years are expected to grow by 45%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? EOLU B’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on EOLU B, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into 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 Eolus Vind as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Eolus Vind you should know about.

If you are no longer interested in Eolus Vind, 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.