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Latécoère SA (EPA:LAT), which is in the aerospace & defense business, and is based in France, received a lot of attention from a substantial price movement on the ENXTPA over the last few months, increasing to €4.51 at one point, and dropping to the lows of €3.5. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Latécoère’s current trading price of €3.5 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 Latécoère’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Latécoère
What is Latécoère worth?
According to my valuation model, Latécoère seems to be fairly priced at around 19% below my intrinsic value, which means if you buy Latécoère today, you’d be paying a fair price for it. And if you believe that the stock is really worth €4.31, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Latécoère’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 does the future of Latécoère 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. However, with a relatively muted revenue growth of 9.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Latécoère, at least in the short term.
What this means for you:
Are you a shareholder? LAT’s 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 tabs on LAT, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.