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At €3.22, Is It Time To Put eDreams ODIGEO S.A. (BME:EDR) On Your Watch List?

Simply Wall St

eDreams ODIGEO S.A. (BME:EDR), which is in the online retail business, and is based in Luxembourg, led the BME gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine eDreams ODIGEO’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for eDreams ODIGEO

Is eDreams ODIGEO still cheap?

Great news for investors – eDreams ODIGEO is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €5, but it is currently trading at €3.22 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because eDreams ODIGEO’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 eDreams ODIGEO generate?

BME:EDR Past and Future Earnings, April 18th 2019

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. eDreams ODIGEO’s revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since EDR is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on EDR for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy EDR. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on eDreams ODIGEO. You can find everything you need to know about eDreams ODIGEO in the latest infographic research report. If you are no longer interested in eDreams ODIGEO, 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.