At kr47.60, Is Zinzino AB (publ) (STO:ZZ B) Worth Looking At Closely?

While Zinzino AB (publ) (STO:ZZ B) might not be the most widely known stock at the moment, it led the OM gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Zinzino’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Zinzino

Is Zinzino Still Cheap?

Zinzino appears to be overvalued by 32% at the moment, based on my discounted cash flow valuation. The stock is currently priced at kr47.60 on the market compared to my intrinsic value of SEK36.09. This means that the opportunity to buy Zinzino at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Zinzino’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 does the future of Zinzino 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. 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. Zinzino's earnings over the next few years are expected to increase by 76%, 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 well and truly priced in ZZ B’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ZZ B should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ZZ B for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for ZZ B, which means it’s worth diving deeper into other factors 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 Zinzino at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Zinzino.

If you are no longer interested in Zinzino, 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.