In This Article:
Nabaltec AG (ETR:NTG), a €198m small-cap, is a chemicals company operating in an industry which faces the challenge or economic cyclicality as well as a structural shift towards higher environmental concerns. Basic material analysts are forecasting for the entire industry, a relatively muted growth of 9.7% in the upcoming year , and a massive growth of 32% over the next couple of years. However this rate still came in below the growth rate of the DE stock market as a whole. In this article, I’ll take you through the sector growth expectations, as well as evaluate whether Nabaltec is lagging or leading in the industry.
See our latest analysis for Nabaltec
What’s the catalyst for Nabaltec’s sector growth?
The sector seems like it has reached maturity in its life cycle, with highly competitive companies and inevitable consolidation. Over the past year, the industry saw growth in the twenties, beating the DE market growth of 9.3%. Nabaltec leads the pack with its impressive earnings growth of 47% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at 8.4% over the next couple of years.
Is Nabaltec and the sector relatively cheap?
The chemicals sector’s PE is currently hovering around 16.83x, in-line with the DE stock market PE of 18.17x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 12% on equities compared to the market’s 12%. On the stock-level, Nabaltec is trading at a PE ratio of 18.57x, which is relatively in-line with the average chemicals stock. In terms of returns, Nabaltec generated 12% in the past year, in-line with its industry average.
Next Steps:
If Nabaltec has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a chemicals industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the materials sector. However, before you make a decision on the stock, I suggest you look at Nabaltec’s fundamentals in order to build a holistic investment thesis.
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Historical Track Record: What has NTG’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Nabaltec? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.