Stock Analysis

What Does Peab AB (publ)'s (STO:PEAB B) Share Price Indicate?

OM:PEAB B
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While Peab AB (publ) (STO:PEAB B) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the OM over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Peab’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Peab

Is Peab Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11% below my intrinsic value, which means if you buy Peab today, you’d be paying a reasonable price for it. And if you believe the company’s true value is SEK61.23, 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 Peab’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.

Can we expect growth from Peab?

earnings-and-revenue-growth
OM:PEAB B Earnings and Revenue Growth April 13th 2023

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. However, with a relatively muted profit growth of 5.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Peab, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in PEAB B’s future outlook, 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 tabs on PEAB B, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Peab (of which 1 is a bit unpleasant!) you should know about.

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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.