At kr233, Is Stendörren Fastigheter AB (publ) (STO:STEF B) Worth Looking At Closely?

Stendörren Fastigheter AB (publ) (STO:STEF B), is not the largest company out there, but it received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr320 at one point, and dropping to the lows of kr233. 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 Stendörren Fastigheter's current trading price of kr233 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 Stendörren Fastigheter’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Stendörren Fastigheter

What's the opportunity in Stendörren Fastigheter?

According to my 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, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Stendörren Fastigheter’s ratio of 5.47x is trading slightly below its industry peers’ ratio of 7.42x, which means if you buy Stendörren Fastigheter today, you’d be paying a decent price for it. And if you believe that Stendörren Fastigheter should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like Stendörren Fastigheter’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Stendörren Fastigheter 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Stendörren Fastigheter, at least in the near future.

What this means for you:

Are you a shareholder? Currently, STEF B appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 STEF B, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on STEF B for a while, now may not be the most advantageous 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 STEF B should the price fluctuate below the industry PE ratio.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, Stendörren Fastigheter has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about.

If you are no longer interested in Stendörren Fastigheter, 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.