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Is There Now An Opportunity In Cegedim SA (EPA:CGM)?

Simply Wall St

Cegedim SA (EPA:CGM), which is in the healthcare services business, and is based in France, saw a double-digit share price rise of over 10% in the past couple of months on the ENXTPA. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Cegedim’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Cegedim

What is Cegedim worth?

Good news, investors! Cegedim is still a bargain right now. My valuation model shows that the intrinsic value for the stock is €46.78, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Cegedim’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.

Can we expect growth from Cegedim?

ENXTPA:CGM Past and Future Earnings, January 4th 2020

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. However, with a relatively muted revenue growth of 8.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Cegedim, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since CGM is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on CGM for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CGM. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Cegedim. You can find everything you need to know about Cegedim in the latest infographic research report. If you are no longer interested in Cegedim, 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.