Is it time to consider buying LAMDA Development SA (ATH:LAMDA)?

While LAMDA Development SA (ATH:LAMDA) may not have the largest market cap in the world, it has seen its share price increase by over 10% in double digits over the past two months on the ATSE. The company’s trading levels have been close to its yearly peak, following the recent rally in the share price. As a small-cap stock, barely covered by analysts, there is generally more scope for mispricing as there is less activity to push the stock closer to its fair value. Is there still a buying opportunity here? Let’s examine LAMDA Development’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for LAMDA Development

Is LAMDA development still cheap?

The stock price looks reasonable at the moment according to our price multiple model, where we compare the company’s price-to-earnings ratio to the industry average. In this case, we used the price-to-earnings (PE) ratio since there is not enough information to reliably forecast the stock’s cash flows. We note that LAMDA Development’s ratio of 25.44x is trading slightly above its industry peers’ ratio of 24.77x, meaning that if you buy LAMDA Development today, you’ll be paying a relatively reasonable price for it. And if you believe LAMDA Development should trade at this level over the long term, then there should be only a fairly negligible downside compared to other industry peers. On top of that, it seems like LAMDA Development’s share price is quite stable, which could mean that there might be less opportunity to buy low in the future now that it is trading around the price multiples of other industry peers. This is because the stock is less volatile than the broader market given its low beta.

Can we expect growth from LAMDA Development?

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. While value investors argue that it’s the intrinsic value relative to the price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. In the case of LAMDA Development, its earnings over the next year are expected to double, indicating an incredibly bullish future. This should lead to stronger cash flows, fueling a higher share price.

What this means for you

Are you a shareholder? It seems that the market has already priced in LAMDA’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors that we haven’t considered today, such as its management team’s track record. Have these factors changed since you last looked at LAMDA? Will you have enough conviction to buy if the price moves below the industry’s price-to-earnings ratio?

Are you a potential investor? If you’re keeping an eye on LAMDA, now might not be the most advantageous time to buy, given that the stock is trading around industry price multiples. However, the positive outlook is encouraging for LAMDA, meaning it’s worth looking more closely at other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to know more about LAMDA Development as a company, it is important to be aware of the risks it faces. When we did our research, we discovered 2 warning signs for LAMDA development (1 not to be ignored!) which, in our opinion, deserve your full attention.

If you are no longer interested in LAMDA Development, you can use our free platform to view our list of over 50 other stocks with high growth potential.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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