At €0.92, Is It Time To Put Sonae, SGPS, S.A. (ELI:SON) On Your Watch List?
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Sonae, SGPS, S.A. (ELI:SON), which is in the consumer retailing business, and is based in Portugal, saw a decent share price growth in the teens level on the ENXTLS over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Sonae SGPS’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Sonae SGPS
What is Sonae SGPS worth?
Great news for investors – Sonae SGPS is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €1.43, but it is currently trading at €0.92 on the share market, meaning that there is still an opportunity to buy now. Sonae SGPS’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Sonae SGPS?
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 -4.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Sonae SGPS. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although SON is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to SON, 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 tabs on SON for some time, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Sonae SGPS. You can find everything you need to know about Sonae SGPS in the latest infographic research report. If you are no longer interested in Sonae SGPS, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
