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INDUS Holding AG (ETR:INH), might not be a large cap stock, but it saw significant share price movement during recent months on the XTRA, rising to highs of €25.80 and falling to the lows of €19.48. 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 INDUS Holding's current trading price of €20.10 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 INDUS Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for INDUS Holding
What Is INDUS Holding Worth?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’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 8.62x is currently trading slightly below its industry peers’ ratio of 12.04x, which means if you buy INDUS Holding today, you’d be paying a reasonable price for it. And if you believe INDUS Holding 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. So, is there another chance to buy low in the future? Given that INDUS Holding’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will INDUS Holding 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. INDUS Holding's earnings over the next few years are expected to increase by 81%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in INH’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at INH? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?