Is Now The Time To Look At Buying Sweco AB (publ) (STO:SWEC B)?

Sweco AB (publ) (STO:SWEC B), is not the largest company out there, but it led the OM gainers with a relatively large price hike in the past couple of weeks. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Sweco’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Sweco

What Is Sweco Worth?

According to my valuation model, Sweco seems to be fairly priced at around 10.32% above my intrinsic value, which means if you buy Sweco today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth SEK104.61, there’s only an insignificant downside when the price falls to its real value. What's more, Sweco’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Sweco?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Sweco's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? SWEC 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 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 SWEC B, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, 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.

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

If you are no longer interested in Sweco, 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.