Davide Campari-Milano Sp.A. (BIT:CPR), a beverage company based in Italy, saw significant share price volatility over the past couple of months on the BIT, rising to the highs of €6.4 and falling to the lows of €5.75. 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 Davide Campari-Milano’s current trading price of €6.31 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Davide Campari-Milano’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Davide Campari-Milano
What’s the opportunity in Davide Campari-Milano?
The stock is currently trading at €6.31 on the share market, which means it is overvalued by 45% compared to my intrinsic value of €4.34. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Davide Campari-Milano’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Davide Campari-Milano look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a negative profit growth of -16.15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Davide Campari-Milano. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? If you believe CPR 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. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 tabs on CPR for some time, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Davide Campari-Milano. You can find everything you need to know about Davide Campari-Milano in the latest infographic research report. If you are no longer interested in Davide Campari-Milano, 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.