Is Bankia SA. (BME:BKIA) Undervalued?
Let’s talk about the popular Bankia SA. (BME:BKIA). The company’s shares received a lot of attention from a substantial price movement on the BME in the over the last few months, increasing to €4.39 at one point, and dropping to the lows of €3.8. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Bankia’s current trading price of €3.85 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bankia’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 Bankia
Is Bankia still cheap?
The stock is currently trading at €3.85 on the share market, which means it is overvalued by 65% compared to my intrinsic value of €2.33. This means that the opportunity to buy Bankia at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Bankia’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Bankia look like?
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. Bankia’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? BKIA’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BKIA 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.
Are you a potential investor? If you’ve been keeping an eye on BKIA for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for BKIA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Bankia. You can find everything you need to know about Bankia in the latest infographic research report. If you are no longer interested in Bankia, 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.
