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Is Now The Time To Look At Buying Salini Impregilo S.p.A. (BIT:SAL)?

Simply Wall St

Salini Impregilo S.p.A. (BIT:SAL), which is in the construction business, and is based in Italy, saw a decent share price growth in the teens level on the BIT over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Salini Impregilo’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Salini Impregilo

Is Salini Impregilo still cheap?

Salini Impregilo appears to be overvalued by 25.67% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €1.80 on the market compared to my intrinsic value of €1.43. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Salini Impregilo’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 does the future of Salini Impregilo look like?

BIT:SAL Past and Future Earnings, August 30th 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. 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 revenues expected to grow by a double-digit 20% over the next couple of years, the outlook is positive for Salini Impregilo. If the level of expenses is able to be maintained, 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? SAL’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 SAL 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 an eye on SAL for a while, 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 SAL, 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 Salini Impregilo. You can find everything you need to know about Salini Impregilo in the latest infographic research report. If you are no longer interested in Salini Impregilo, 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.