What Is Fomento de Construcciones y Contratas, S.A.'s (BME:FCC) Share Price Doing?
Fomento de Construcciones y Contratas, S.A. (BME:FCC), which is in the construction business, and is based in Spain, received a lot of attention from a substantial price movement on the BME over the last few months, increasing to €11.96 at one point, and dropping to the lows of €7.17. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Fomento de Construcciones y Contratas's current trading price of €7.68 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 Fomento de Construcciones y Contratas’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 Fomento de Construcciones y Contratas
What's the opportunity in Fomento de Construcciones y Contratas?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 18% below my intrinsic value, which means if you buy Fomento de Construcciones y Contratas today, you’d be paying a fair price for it. And if you believe that the stock is really worth €9.40, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Fomento de Construcciones y Contratas’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Fomento de Construcciones y Contratas look like?
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. Fomento de Construcciones y Contratas’s earnings over the next few years are expected to increase by 47%, 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 FCC’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 FCC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 Fomento de Construcciones y Contratas. You can find everything you need to know about Fomento de Construcciones y Contratas in the latest infographic research report. If you are no longer interested in Fomento de Construcciones y Contratas, 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.
