Let’s talk about the popular Compagnie de Saint-Gobain SA (EPA:SGO). The company’s shares saw significant share price volatility over the past couple of months on the ENXTPA, rising to the highs of €45.69 and falling to the lows of €35.5. 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 Compagnie de Saint-Gobain’s current trading price of €36.65 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 Compagnie de Saint-Gobain’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Compagnie de Saint-Gobain still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.0% below my intrinsic value, which means if you buy Compagnie de Saint-Gobain today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €38.19, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like Compagnie de Saint-Gobain’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Compagnie de Saint-Gobain 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 Compagnie de Saint-Gobain, it is expected to deliver a relatively unexciting earnings growth of 6.5%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SGO’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 SGO, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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 Compagnie de Saint-Gobain. You can find everything you need to know about Compagnie de Saint-Gobain in the latest infographic research report. If you are no longer interested in Compagnie de Saint-Gobain, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.