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Let's talk about the popular RATIONAL Aktiengesellschaft (ETR:RAA). The company's shares saw significant share price movement during recent months on the XTRA, rising to highs of €883 and falling to the lows of €799. 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 RATIONAL's current trading price of €850 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 RATIONAL’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for RATIONAL
What's The Opportunity In RATIONAL?
RATIONAL appears to be overvalued by 26% at the moment, based on our discounted cash flow valuation. The stock is currently priced at €850 on the market compared to our intrinsic value of €673.29. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since RATIONAL’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will RATIONAL generate?
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. With profit expected to grow by 25% over the next couple of years, the future seems bright for RATIONAL. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in RAA’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RAA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.