While Bystronic AG (VTX:BYS) might not have the largest market cap around , it saw significant share price movement during recent months on the SWX, rising to highs of CHF509 and falling to the lows of CHF431. 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 Bystronic's current trading price of CHF438 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 Bystronic’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Bystronic
What's The Opportunity In Bystronic?
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. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Bystronic’s ratio of 18.32x is trading slightly above its industry peers’ ratio of 18.32x, which means if you buy Bystronic today, you’d be paying a relatively reasonable price for it. And if you believe that Bystronic should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since Bystronic’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 does the future of Bystronic look like?
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 negative profit growth of -5.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Bystronic. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? BYS seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on BYS, take a look at whether its fundamentals have changed.