Compagnie d’Entreprises CFE SA (EBR:CFEB), a construction company based in Belgium, received a lot of attention from a substantial price movement on the ENXTBR over the last few months, increasing to €111 at one point, and dropping to the lows of €97.1. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Compagnie d’Entreprises CFE’s current trading price of €97.1 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 Compagnie d’Entreprises CFE’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Compagnie d’Entreprises CFE
Is Compagnie d’Entreprises CFE still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 13.62x is currently trading in-line with its industry peers’ ratio, which means if you buy Compagnie d’Entreprises CFE today, you’d be paying a relatively reasonable price for it. Furthermore, it seems like Compagnie d’Entreprises CFE’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Compagnie d’Entreprises CFE generate?
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Compagnie d’Entreprises CFE’s earnings over the next few years are expected to increase by 33.4%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in CFEB’s positive 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 CFEB? Will you have enough confidence to invest in the company should the price drop below its fair value?