When Should You Buy Crédit Agricole S.A. (EPA:ACA)?

Today we're going to take a look at the well-established Crédit Agricole S.A. (EPA:ACA). The company's stock saw a decent share price growth in the teens level on the ENXTPA over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Crédit Agricole’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Crédit Agricole

What is Crédit Agricole worth?

According to my valuation model, Crédit Agricole seems to be fairly priced at around 5.4% below my intrinsic value, which means if you buy Crédit Agricole today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €13.49, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Crédit Agricole’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Crédit Agricole?

ENXTPA:ACA Past and Future Earnings, January 22nd 2020
ENXTPA:ACA Past and Future Earnings, January 22nd 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Crédit Agricole’s earnings over the next few years are expected to increase by 25%, 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? ACA’s optimistic future growth appears to have been factored into the current share price, 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on ACA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Crédit Agricole. You can find everything you need to know about Crédit Agricole in the latest infographic research report. If you are no longer interested in Crédit Agricole, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.