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Mercedes-Benz Group AG (ETR:MBG) saw significant share price movement during recent months on the XTRA, rising to highs of €62.34 and falling to the lows of €51.44. 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 Mercedes-Benz Group's current trading price of €53.78 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 Mercedes-Benz Group’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 Mercedes-Benz Group
Is Mercedes-Benz Group 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. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Mercedes-Benz Group’s ratio of 4.72x is trading slightly below its industry peers’ ratio of 5.32x, which means if you buy Mercedes-Benz Group today, you’d be paying a decent price for it. And if you believe that Mercedes-Benz Group should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. So, is there another chance to buy low in the future? Given that Mercedes-Benz Group’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 does the future of Mercedes-Benz Group 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 a relatively muted profit growth of 8.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Mercedes-Benz Group, at least in the short term.
What This Means For You
Are you a shareholder? MBG’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 track record of its management team. Have these factors changed since the last time you looked at MBG? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?