Tessenderlo Group NV (EBR:TESB), which is in the chemicals business, and is based in Belgium, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of €29.95 to €32.65. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tessenderlo Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Tessenderlo Group still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.9% below my intrinsic value, which means if you buy Tessenderlo Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth €31.85, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Tessenderlo Group’s low beta implies that the stock is less volatile than the wider market.
What kind of growth will Tessenderlo Group generate?
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 8.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Tessenderlo Group, at least in the short term.
What this means for you:
Are you a shareholder? TESB’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 TESB, now may not be the most advantageous 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 Tessenderlo Group. You can find everything you need to know about Tessenderlo Group in the latest infographic research report. If you are no longer interested in Tessenderlo Group, 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 firstname.lastname@example.org. 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.
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