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When Should You Buy CaixaBank, S.A. (BME:CABK)?

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Today we're going to take a look at the well-established CaixaBank, S.A. (BME:CABK). The company's stock saw a significant share price rise of over 20% in the past couple of months on the BME. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine CaixaBank’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for CaixaBank

What is CaixaBank worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.91% above my intrinsic value, which means if you buy CaixaBank today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €2.63, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that CaixaBank’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of CaixaBank look like?

BME:CABK Past and Future Earnings, December 2nd 2019
BME:CABK Past and Future Earnings, December 2nd 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. CaixaBank’s earnings over the next few years are expected to increase by 43%, 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 already priced in CABK’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on CABK, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 CaixaBank. You can find everything you need to know about CaixaBank in the latest infographic research report. If you are no longer interested in CaixaBank, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.