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DATRON AG (ETR:DAR), is not the largest company out there, but it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €11.80 at one point, and dropping to the lows of €10.70. 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 DATRON's current trading price of €10.70 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 DATRON’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 DATRON
What's The Opportunity In DATRON?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.48x is currently trading slightly below its industry peers’ ratio of 12.05x, which means if you buy DATRON today, you’d be paying a decent price for it. And if you believe DATRON should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. In addition to this, it seems like DATRON’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.
What does the future of DATRON look like?
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. DATRON's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to 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 DAR’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at DAR? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?