Alelion Energy Systems AB (publ) (STO:ALELIO), which is in the electrical business, and is based in Sweden, received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr1.54 at one point, and dropping to the lows of kr0.86. 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 Alelion Energy Systems's current trading price of kr0.94 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 Alelion Energy Systems’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 Alelion Energy Systems

What is Alelion Energy Systems worth?

According to my valuation model, the stock is currently overvalued by about 26%, trading at kr0.94 compared to my intrinsic value of SEK0.74. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Alelion Energy Systems’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Alelion Energy Systems 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. 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. Alelion Energy Systems’s earnings over the next few years are expected to increase by 76%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in ALELIO’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ALELIO should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.