Let’s talk about the popular The Swatch Group AG (SWX:UHR). The company’s shares saw significant share price volatility over the past couple of months on the SWX, rising to the highs of CHF427.2 and falling to the lows of CHF384.9. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Swatch Group’s current trading price of CHF421.4 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Swatch Group’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 Swatch Group
What’s the opportunity in Swatch Group?
The stock is currently trading at CHF421.40 on the share market, which means it is overvalued by 66% compared to my intrinsic value of CHF254.51. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Swatch Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
Can we expect growth from Swatch Group?
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. With profit expected to grow by 70.72% over the next couple of years, the future seems bright for Swatch Group. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? UHR’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe UHR 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 UHR 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 UHR, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.