Danieli & C Officine Meccaniche SpA (BIT:DAN), which is in the machinery business, and is based in Italy, saw significant share price volatility over the past couple of months on the BIT, rising to the highs of €23.35 and falling to the lows of €20.6. 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 Danieli & C. Officine Meccaniche’s current trading price of €21.4 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Danieli & C. Officine Meccaniche’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Danieli & C. Officine Meccaniche still cheap?
According to my valuation model, Danieli & C. Officine Meccaniche seems to be fairly priced at around 4.38% above my intrinsic value, which means if you buy Danieli & C. Officine Meccaniche today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is €20.5, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Danieli & C. Officine Meccaniche’s share price is quite stable, which could mean 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 Danieli & C. Officine Meccaniche 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. With profit expected to more than double over the next couple of years, the future seems bright for Danieli & C. Officine Meccaniche. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? DAN’s optimistic future growth appears to have been factored into the current share price, 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 DAN, now may not be the most optimal 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 diving deeper into 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 Danieli & C. Officine Meccaniche. You can find everything you need to know about Danieli & C. Officine Meccaniche in the latest infographic research report. If you are no longer interested in Danieli & C. Officine Meccaniche, 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.