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Is It Time To Consider Buying Jerónimo Martins, SGPS, S.A. (ELI:JMT)?

Simply Wall St

Jerónimo Martins, SGPS, S.A. (ELI:JMT), which is in the consumer retailing business, and is based in Portugal, received a lot of attention from a substantial price movement on the ENXTLS over the last few months, increasing to €14.8 at one point, and dropping to the lows of €12.54. 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 Jerónimo Martins SGPS's current trading price of €13.32 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Jerónimo Martins SGPS’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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View our latest analysis for Jerónimo Martins SGPS

What is Jerónimo Martins SGPS worth?

Jerónimo Martins SGPS appears to be overvalued by 20.19% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €13.32 on the market compared to my intrinsic value of €11.08. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Jerónimo Martins SGPS’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 Jerónimo Martins SGPS look like?

ENXTLS:JMT Past and Future Earnings, May 23rd 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 profit expected to grow by 41% over the next couple of years, the future seems bright for Jerónimo Martins SGPS. 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? It seems like the market has well and truly priced in JMT’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe JMT 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 tabs on JMT for some time, 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 JMT, 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 Jerónimo Martins SGPS. You can find everything you need to know about Jerónimo Martins SGPS in the latest infographic research report. If you are no longer interested in Jerónimo Martins 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.