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K+S Aktiengesellschaft (ETR:SDF), might not be a large cap stock, but it saw significant share price movement during recent months on the XTRA, rising to highs of €22.69 and falling to the lows of €16.13. 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 K+S' current trading price of €16.16 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at K+S’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for K+S
Is K+S Still Cheap?
According to my valuation model, the stock is currently overvalued by about 27%, trading at €16.16 compared to my intrinsic value of €12.77. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like K+S’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of K+S look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for K+S, at least in the near future.
What This Means For You
Are you a shareholder? If you believe SDF is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to de-risk your portfolio. 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 tabs on SDF for some time, now may not be the best time to enter into the stock. The company’s price has climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?