Tornos Holding AG (VTX:TOHN), which is in the machinery business, and is based in Switzerland, maintained its current share price over the past couple of month on the SWX, with a relatively tight range of CHF6.68 to CHF7.30. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tornos Holding’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 Tornos Holding
Is Tornos Holding still cheap?
According to my valuation model, Tornos Holding seems to be fairly priced at around 0.8% below my intrinsic value, which means if you buy Tornos Holding today, you’d be paying a fair price for it. And if you believe that the stock is really worth CHF6.92, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Tornos Holding’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Tornos Holding?
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 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 Tornos Holding, at least in the near future.
What this means for you:
Are you a shareholder? TOHN seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial 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 tabs on TOHN 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 TOHN should the price fluctuate below its true value.