Resilux NV (ENXTBR:RES), a packaging company based in Belgium, maintained its current share price over the past couple of month on the ENXTBR, with a relatively tight range of €137 to €144. 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 Resilux’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 Resilux
What is Resilux worth?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Resilux’s ratio of 18.07x is trading slightly above its industry peers’ ratio of 17.94x, which means if you buy Resilux today, you’d be paying a relatively reasonable price for it. And if you believe that Resilux should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Furthermore, Resilux’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will Resilux generate?
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. Though in the case of Resilux, it is expected to deliver a negative revenue growth of -2.03% over the next couple of years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, RES appears to be trading around its fair value, 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 RES, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on RES for a while, now may not be the most optimal 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. Furthermore, 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 RES should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Resilux. You can find everything you need to know about Resilux in the latest infographic research report. If you are no longer interested in Resilux, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.