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Bonduelle SA (EPA:BON), which is in the food 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 €29.6 at one point, and dropping to the lows of €22.9. 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 Bonduelle's current trading price of €23.45 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 Bonduelle’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 Bonduelle
What's the opportunity in Bonduelle?
Great news for investors – Bonduelle is still trading at a fairly cheap price. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.78x is currently well-below the industry average of 16.36x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Bonduelle’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of Bonduelle look like?
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. With profit expected to grow by 35% over the next couple of years, the future seems bright for Bonduelle. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since BON is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on BON for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BON. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.