Is Now The Time To Look At Buying Genovis AB (publ.) (STO:GENO)?

Genovis AB (publ.) (STO:GENO), might not be a large cap stock, but it saw significant share price movement during recent months on the OM, rising to highs of kr53.60 and falling to the lows of kr31.40. 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 Genovis AB (publ.)'s current trading price of kr31.40 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Genovis AB (publ.)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Genovis AB (publ.)

What's The Opportunity In Genovis AB (publ.)?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Genovis AB (publ.)’s ratio of 33.42x is trading slightly below its industry peers’ ratio of 33.42x, which means if you buy Genovis AB (publ.) today, you’d be paying a reasonable price for it. And if you believe Genovis AB (publ.) should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Genovis AB (publ.)’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Genovis AB (publ.) 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. 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 negative profit growth of -14% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Genovis AB (publ.). This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? GENO seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on GENO, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on GENO for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on GENO should the price fluctuate below the industry PE ratio.

So while earnings quality is important, it's equally important to consider the risks facing Genovis AB (publ.) at this point in time. While conducting our analysis, we found that Genovis AB (publ.) has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Genovis AB (publ.), 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.