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Today we're going to take a look at the well-established Koninklijke Philips N.V. (AMS:PHIA). The company's stock saw significant share price movement during recent months on the ENXTAM, rising to highs of €45.61 and falling to the lows of €37.00. 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 Koninklijke Philips's current trading price of €37.00 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Koninklijke Philips’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 Koninklijke Philips
What's the opportunity in Koninklijke Philips?
Good news, investors! Koninklijke Philips is still a bargain right now. My valuation model shows that the intrinsic value for the stock is €65.33, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Koninklijke Philips’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Koninklijke Philips?
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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Koninklijke Philips’s earnings over the next few years are expected to increase by 84%, 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? Since PHIA is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on PHIA for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PHIA. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.