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AIXTRON SE (ETR:AIXA), might not be a large cap stock, but it saw significant share price movement during recent months on the XTRA, rising to highs of €15.17 and falling to the lows of €9.20. 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 AIXTRON's current trading price of €10.06 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at AIXTRON’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is AIXTRON Still Cheap?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.66x is currently trading slightly below its industry peers’ ratio of 11.53x, which means if you buy AIXTRON today, you’d be paying a reasonable price for it. And if you believe AIXTRON should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like AIXTRON’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.
Check out our latest analysis for AIXTRON
What kind of growth will AIXTRON 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. However, with a relatively muted profit growth of 9.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for AIXTRON, at least in the short term.
What This Means For You
Are you a shareholder? AIXA’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at AIXA? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?