At UK£4.18, Is Vesuvius plc (LON:VSVS) Worth Looking At Closely?
While Vesuvius plc (LON:VSVS) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the LSE, rising to highs of UK£4.35 and falling to the lows of UK£3.86. 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 Vesuvius' current trading price of UK£4.18 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 Vesuvius’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Vesuvius
Is Vesuvius Still Cheap?
Great news for investors – Vesuvius is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is £5.85, but it is currently trading at UK£4.18 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Vesuvius’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 Vesuvius look like?
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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Vesuvius, at least in the near future.
What This Means For You
Are you a shareholder? Although VSVS is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to VSVS, 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 VSVS for a while, but hesitant on making the leap, I recommend you dig deeper 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.
If you'd like to know more about Vesuvius as a business, it's important to be aware of any risks it's facing. Our analysis shows 2 warning signs for Vesuvius (1 makes us a bit uncomfortable!) and we strongly recommend you look at them before investing.
If you are no longer interested in Vesuvius, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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