Constellium NV
CSTM
Delayed Nyse - 03/24 09:02:04 pm
6.2USD
-6.06%

A good level to buy

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David Meurisse
Contributor / Partner

Strategy published on : 03/16/2017 | 15:29

long trade
Live

Entry price : 6.075$
Target : 7.35$
Stop-loss : 4.95$
Potential : 20.99%

The selling pressure regarding Constellium NV shares could subside shortly. In fact, the support area that is currently being tested around 5.1 USD has come into play and could, at least in the short term, keep the downside pressure at bay.
Strengths

● The current area is a good opportunity for investors interested in buying the stock in a mid or long-term perspective. Indeed, the share is moving closer to its lower bound at USD 5.9 USD in weekly data.

● Graphically speaking, the timing seems perfect for purchasing the stock close to the USD 5.1 support.

● The stock, which is currently worth 2017 to 0.52 times its sales, is clearly overvalued in comparison with peers.

● The equity is one of the most attractive in the market with regard to earnings multiple-based valuation.

● Analysts have consistently raised their revenue expectations for the company, which provides good prospects for the current and next years in terms of revenue growth.

● The difference between current prices and the average target price is rather important and implies a significant appreciation potential for the stock.

● Within the weekly time frame the stock shows a bullish technical configuration above the support level at 5.9 USD


Weaknesses

● The company does not generate enough profits, which is an alarming weak point.

● The company is in debt and has limited leeway for investment

● The company's earnings releases usually do not meet expectations.

● For the last twelve months, sales expectations have been significantly downgraded, which means that less important sales volumes are expected for the current fiscal year over the previous period.

● Analysts covering the stock have recently lowered their earnings forecast.

● For the last twelve months, the analysts covering the company have given a bearish overview of EPS estimates, resulting in frequent downward revisions.

● For the last 12 months, analysts have been regularly downgrading their EPS expectations. Analysts predict worse results for the company against their predictions a year ago.

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