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ENCE Energía y Celulosa, S.A. (BME:ENC), which is in the forestry business, and is based in Spain, saw significant share price movement during recent months on the BME, rising to highs of €4.14 and falling to the lows of €3.22. 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 ENCE Energía y Celulosa's current trading price of €3.37 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 ENCE Energía y Celulosa’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 ENCE Energía y Celulosa
What's the opportunity in ENCE Energía y Celulosa?
According to my valuation model, ENCE Energía y Celulosa seems to be fairly priced at around 19.67% above my intrinsic value, which means if you buy ENCE Energía y Celulosa today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth €2.82, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since ENCE Energía y Celulosa’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.
Can we expect growth from ENCE Energía y Celulosa?
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. However, with a relatively muted profit growth of 8.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for ENCE Energía y Celulosa, at least in the short term.
What this means for you:
Are you a shareholder? ENC’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?