B+S Banksysteme Aktiengesellschaft (ETR:DTD2), which is in the software business, and is based in Germany, led the XTRA gainers with a relatively large price hike in the past couple of weeks. 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? Today I will analyse the most recent data on B+S Banksysteme’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for B+S Banksysteme

Is B+S Banksysteme still cheap?

B+S Banksysteme appears to be overvalued by 41% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €2.56 on the market compared to my intrinsic value of €1.82. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that B+S Banksysteme’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from B+S Banksysteme?

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. In B+S Banksysteme’s case, its revenues over the next few years are expected to grow by 46%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in DTD2’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 DTD2 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.

Are you a potential investor? If you’ve been keeping an eye on DTD2 for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for DTD2, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.