In This Article:
ABO Wind AG (ETR:AB9), is not the largest company out there, but it led the XTRA gainers with a relatively large price hike in the past couple of weeks. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine ABO Wind’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for ABO Wind
What Is ABO Wind Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 4.1% below our intrinsic value, which means if you buy ABO Wind today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €58.59, then there’s not much of an upside to gain from mispricing. What's more, ABO Wind’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will ABO Wind generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 29% over the next couple of years, the future seems bright for ABO Wind. 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 already priced in AB9’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on AB9, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing ABO Wind at this point in time. While conducting our analysis, we found that ABO Wind has 2 warning signs and it would be unwise to ignore them.