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Is There Now An Opportunity In Semapa - Sociedade de Investimento e Gestão, SGPS, S.A. (ELI:SEM)?

Simply Wall St

Semapa - Sociedade de Investimento e Gestão, SGPS, S.A. (ELI:SEM), which is in the forestry business, and is based in Portugal, received a lot of attention from a substantial price increase on the ENXTLS over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Semapa - Sociedade de Investimento e Gestão SGPS’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Semapa - Sociedade de Investimento e Gestão SGPS

What's the opportunity in Semapa - Sociedade de Investimento e Gestão SGPS?

Good news, investors! Semapa - Sociedade de Investimento e Gestão SGPS is still a bargain right now. According to my valuation, the intrinsic value for the stock is €27.04, but it is currently trading at €14.04 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Semapa - Sociedade de Investimento e Gestão SGPS’s share price may be 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.

Can we expect growth from Semapa - Sociedade de Investimento e Gestão SGPS?

ENXTLS:SEM Past and Future Earnings, November 14th 2019

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. Though in the case of Semapa - Sociedade de Investimento e Gestão SGPS, it is expected to deliver a negative earnings growth of -10%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although SEM is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to SEM, 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 an eye on SEM for a while, but hesitant on making the leap, I recommend you research further 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 Semapa - Sociedade de Investimento e Gestão SGPS. You can find everything you need to know about Semapa - Sociedade de Investimento e Gestão SGPS in the latest infographic research report. If you are no longer interested in Semapa - Sociedade de Investimento e Gestão SGPS, 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.