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Why Altri, S.G.P.S., S.A. (ELI:ALTR) Could Be Worth Watching

Simply Wall St

Altri, S.G.P.S., S.A. (ELI:ALTR), which is in the forestry 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 €6.21 at one point, and dropping to the lows of €5.13. 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 Altri S.G.P.S's current trading price of €5.38 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 Altri S.G.P.S’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 Altri S.G.P.S

What is Altri S.G.P.S worth?

According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Altri S.G.P.S’s ratio of 5.85x is trading slightly below its industry peers’ ratio of 10.37x, which means if you buy Altri S.G.P.S today, you’d be paying a fair price for it. And if you believe Altri S.G.P.S should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. Is there another opportunity to buy low in the future? Since Altri S.G.P.S’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Altri S.G.P.S?

ENXTLS:ALTR Past and Future Earnings, October 18th 2019

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. Though in the case of Altri S.G.P.S, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? ALTR seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on ALTR, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ALTR for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on ALTR should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Altri S.G.P.S. You can find everything you need to know about Altri S.G.P.S in the latest infographic research report. If you are no longer interested in Altri S.G.P.S, 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.