In This Article:
Robertet SA (EPA:RBT), a €1.2b small-cap, is a chemicals company operating in an industry which is sensitive to changes in the business cycle, as it supplies materials for construction activities. Basic material analysts are forecasting for the entire industry, a fairly unexciting growth rate of 1.3% in the upcoming year , and a massive growth of 39% over the next couple of years. However this rate still came in below the growth rate of the FR stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Robertet is a laggard or leader relative to its basic materials sector peers.
View our latest analysis for Robertet
What’s the catalyst for Robertet’s sector growth?
The sector seems to be mature in terms of its industry life cycle, with vastly competitive companies and inevitable consolidation. In the previous year, the industry saw growth of 9.4%, though still underperforming the wider FR stock market. Robertet leads the pack with its impressive earnings growth of 13% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Robertet poised to deliver a 10% growth over the next couple of years compared to the industry’s 1.3%. This growth may make Robertet a more expensive stock relative to its peers.
Is Robertet and the sector relatively cheap?
The chemicals sector’s PE is currently hovering around 19.65x, relatively similar to the rest of the FR stock market PE of 15.61x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 11% on equities compared to the market’s 11%. On the stock-level, Robertet is trading at a PE ratio of 23.6x, which is relatively in-line with the average chemicals stock. In terms of returns, Robertet generated 13% in the past year, which is 2.5% over the chemicals sector.
Next Steps:
Robertet’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Robertet has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Robertet’s fundamentals in order to build a holistic investment thesis.