Zespól Elektrowni Patnów-Adamów-Konin SA. (WSE:ZEP), a electric utilities company based in Poland, saw significant share price volatility over the past couple of months on the WSE, rising to the highs of PLN13 and falling to the lows of PLN10.38. 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 Zespól Elektrowni Patnów-Adamów-Konin’s current trading price of PLN11.4 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 Zespól Elektrowni Patnów-Adamów-Konin’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Zespól Elektrowni Patnów-Adamów-Konin
Is Zespól Elektrowni Patnów-Adamów-Konin still cheap?
Great news for investors – Zespól Elektrowni Patnów-Adamów-Konin is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is PLN31.73, but it is currently trading at ZŁ11.40 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Zespól Elektrowni Patnów-Adamów-Konin’s share price is quite stable relative to the rest of 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 kind of growth will Zespól Elektrowni Patnów-Adamów-Konin 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. However, with an extreme expected decline in the top-line over the next couple of years, near-term growth is certainly not a driver of a buy decision. Even with a larger decline in expenses, it seems like high uncertainty is on the cards for Zespól Elektrowni Patnów-Adamów-Konin.
What this means for you:
Are you a shareholder? Although ZEP is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to ZEP, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on ZEP for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Zespól Elektrowni Patnów-Adamów-Konin. You can find everything you need to know about Zespól Elektrowni Patnów-Adamów-Konin in the latest infographic research report. If you are no longer interested in Zespól Elektrowni Patnów-Adamów-Konin, 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.