Elders Limited (ASX:ELD), a food company based in Australia, received a lot of attention from a substantial price movement on the ASX in the over the last few months, increasing to A$8.81 at one point, and dropping to the lows of A$6.56. 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 Elders’s current trading price of A$6.9 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 Elders’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 Elders

Is Elders still cheap?

According to my valuation model, Elders seems to be fairly priced at around 5.97% below my intrinsic value, which means if you buy Elders today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$7.34, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Elders’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Elders?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 Elders, at least in the near future.

What this means for you:

Are you a shareholder? ELD seems fairly priced 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 optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ELD for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, 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 crystalize your views on ELD should the price fluctuate below its true value.