U.S. Markets closed

Is Landi Renzo S.p.A. (BIT:LR) Potentially Undervalued?

Simply Wall St

Landi Renzo S.p.A. (BIT:LR), which is in the auto components business, and is based in Italy, saw significant share price movement during recent months on the BIT, rising to highs of €1.00 and falling to the lows of €0.89. 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 Landi Renzo's current trading price of €0.91 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 Landi Renzo’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 Landi Renzo

What's the opportunity in Landi Renzo?

Landi Renzo appears to be overvalued by 26% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €0.91 on the market compared to my intrinsic value of €0.72. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Landi Renzo’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Landi Renzo generate?

BIT:LR Past and Future Earnings, January 16th 2020

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. 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. With profit expected to grow by 72% over the next year, the near-term future seems bright for Landi Renzo. 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? LR’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe LR 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 LR 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 LR, 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 Landi Renzo. You can find everything you need to know about Landi Renzo in the latest infographic research report. If you are no longer interested in Landi Renzo, 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.