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Amid ongoing concerns about U.S. trade tariffs and monetary policy uncertainties, European markets have experienced a mixed performance, with the STOXX Europe 600 Index ending slightly lower and major indexes either down or flat. In this environment of fluctuating economic signals, identifying stocks that are trading below their intrinsic value can present opportunities for investors seeking potential long-term gains.
Top 10 Undervalued Stocks Based On Cash Flows In Europe
Name | Current Price | Fair Value (Est) | Discount (Est) |
Sword Group (ENXTPA:SWP) | €32.15 | €64.13 | 49.9% |
Telefonaktiebolaget LM Ericsson (OM:ERIC B) | SEK83.22 | SEK164.64 | 49.5% |
Net Insight (OM:NETI B) | SEK4.83 | SEK9.58 | 49.6% |
JOST Werke (XTRA:JST) | €50.30 | €98.61 | 49% |
Storytel (OM:STORY B) | SEK92.25 | SEK180.58 | 48.9% |
Star7 (BIT:STAR7) | €6.20 | €12.36 | 49.8% |
dormakaba Holding (SWX:DOKA) | CHF686.00 | CHF1359.67 | 49.5% |
Neosperience (BIT:NSP) | €0.538 | €1.06 | 49.2% |
Groupe Airwell Société anonyme (ENXTPA:ALAIR) | €1.13 | €2.25 | 49.8% |
Cavotec (OM:CCC) | SEK17.35 | SEK34.06 | 49.1% |
Let's dive into some prime choices out of the screener.
HMS Networks
Overview: HMS Networks AB (publ) provides products that facilitate communication and information sharing for industrial equipment globally, with a market cap of SEK23.68 billion.
Operations: The company generates revenue from its Wireless Communications Equipment segment, which amounts to SEK3.06 billion.
Estimated Discount To Fair Value: 25.2%
HMS Networks is trading at SEK472, significantly below its estimated fair value of SEK630.67, indicating undervaluation based on discounted cash flows. Despite a forecasted low return on equity and declining profit margins from 18.9% to 10.1%, the company anticipates strong earnings growth of 32.7% annually, outpacing the Swedish market's average growth rate. Recent acquisitions have led to a dividend suspension, while revenue and earnings are expected to improve in the latter half of 2025.
Kontron
Overview: Kontron AG provides internet of things (IoT) solutions in Austria and internationally, with a market cap of €1.53 billion.
Operations: The company's revenue segments include €1.16 billion from Europe, €294.77 million from Global operations, and €429.91 million from Software + Solutions.
Estimated Discount To Fair Value: 10.8%