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CEWE Stiftung & Co. KGaA (ETR:CWC), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €110 at one point, and dropping to the lows of €96.00. 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 CEWE Stiftung KGaA's current trading price of €105 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 CEWE Stiftung KGaA’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 CEWE Stiftung KGaA
Is CEWE Stiftung KGaA Still Cheap?
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. We’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 11.81x is currently trading slightly above its industry peers’ ratio of 11.81x, which means if you buy CEWE Stiftung KGaA today, you’d be paying a relatively reasonable price for it. And if you believe CEWE Stiftung KGaA should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because CEWE Stiftung KGaA’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from CEWE Stiftung KGaA?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 relatively muted profit growth of 5.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for CEWE Stiftung KGaA, at least in the short term.
What This Means For You
Are you a shareholder? CWC’s future growth appears to have been factored into the current share price, 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 CWC? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?