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Eurocell plc (LON:ECEL), is not the largest company out there, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£1.66 and falling to the lows of UK£1.39. 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 Eurocell's current trading price of UK£1.39 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 Eurocell’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Eurocell
What Is Eurocell Worth?
Great news for investors – Eurocell is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is £2.01, but it is currently trading at UK£1.39 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Eurocell’s share price may be 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 Eurocell 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 a negative profit growth of -12% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Eurocell. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although ECEL is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ECEL, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on ECEL for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.