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Is Gr. Sarantis S.A. (ATH:SAR) Potentially Undervalued?

Simply Wall St

Gr. Sarantis S.A. (ATH:SAR), which is in the personal products business, and is based in Greece, saw a significant share price rise of over 20% in the past couple of months on the ATSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Gr. Sarantis’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Gr. Sarantis

Is Gr. Sarantis still cheap?

Gr. Sarantis appears to be overvalued by 40.21% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €8.70 on the market compared to my intrinsic value of €6.2. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that Gr. Sarantis’s share price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Gr. Sarantis look like?

ATSE:SAR Past and Future Earnings, August 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. With profit expected to grow by 34% over the next couple of years, the future seems bright for Gr. Sarantis. 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? It seems like the market has well and truly priced in SAR’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SAR 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. 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 SAR for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for SAR, which means it’s worth diving deeper into other factors 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 Gr. Sarantis. You can find everything you need to know about Gr. Sarantis in the latest infographic research report. If you are no longer interested in Gr. Sarantis, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.