Is Now The Time To Look At Buying Epiroc AB (publ) (STO:EPI A)?

Epiroc AB (publ) (STO:EPI A) received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr232 at one point, and dropping to the lows of kr201. 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 Epiroc's current trading price of kr209 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Epiroc’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 Epiroc

What Is Epiroc Worth?

According to our valuation model, Epiroc seems to be fairly priced at around 13% below our intrinsic value, which means if you buy Epiroc today, you’d be paying a reasonable price for it. And if you believe the company’s true value is SEK239.26, then there’s not much of an upside to gain from mispricing. In addition to this, Epiroc has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Epiroc look like?

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. 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. Epiroc'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? It seems like the market has already priced in EPI A’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on EPI A, 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.

So while earnings quality is important, it's equally important to consider the risks facing Epiroc at this point in time. At Simply Wall St, we found 1 warning sign for Epiroc and we think they deserve your attention.

If you are no longer interested in Epiroc, 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.

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