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Ponsse Oyj (HEL:PON1V), which is in the machinery business, and is based in Finland, saw significant share price movement during recent months on the HLSE, rising to highs of €29.30 and falling to the lows of €25.25. 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 Ponsse Oyj's current trading price of €27.70 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 Ponsse Oyj’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 Ponsse Oyj
What is Ponsse Oyj worth?
According to my valuation model, Ponsse Oyj seems to be fairly priced at around 14% below my intrinsic value, which means if you buy Ponsse Oyj today, you’d be paying a fair price for it. And if you believe the company’s true value is €32.31, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Ponsse Oyj’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Ponsse Oyj generate?
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 26% over the next couple of years, the future seems bright for Ponsse Oyj. 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? PON1V’s optimistic 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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on PON1V, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.