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Let's talk about the popular ABN AMRO Group N.V. (AMS:ABN). The company's shares received a lot of attention from a substantial price movement on the ENXTAM over the last few months, increasing to €21.88 at one point, and dropping to the lows of €18.85. 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 ABN AMRO Group's current trading price of €19.28 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 ABN AMRO 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 ABN AMRO Group
What is ABN AMRO Group worth?
According to my valuation model, ABN AMRO Group seems to be fairly priced at around 0.30% above my intrinsic value, which means if you buy ABN AMRO Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth €19.22, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since ABN AMRO Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.
What kind of growth will ABN AMRO Group 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. With profit expected to grow by a double-digit 10% over the next couple of years, the outlook is positive for ABN AMRO Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in ABN’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?