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Is Promotora de Informaciones, S.A. (BME:PRS) Potentially Undervalued?

Simply Wall St

Promotora de Informaciones, S.A. (BME:PRS), which is in the media business, and is based in Spain, received a lot of attention from a substantial price movement on the BME over the last few months, increasing to €1.52 at one point, and dropping to the lows of €1.25. 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 Promotora de Informaciones's current trading price of €1.33 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 Promotora de Informaciones’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Promotora de Informaciones

What is Promotora de Informaciones worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11.75% above my intrinsic value, which means if you buy Promotora de Informaciones today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €1.19, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Promotora de Informaciones’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Promotora de Informaciones look like?

BME:PRS Past and Future Earnings, January 11th 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. 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 5.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Promotora de Informaciones, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in PRS’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on PRS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Promotora de Informaciones. You can find everything you need to know about Promotora de Informaciones in the latest infographic research report. If you are no longer interested in Promotora de Informaciones, 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.