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ABO Energy GmbH & Co. KGaA (ETR:AB9), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine ABO Energy GmbH KGaA’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What's The Opportunity In ABO Energy GmbH KGaA?
Great news for investors – ABO Energy GmbH KGaA is still trading at a fairly cheap price 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 13.87x is currently well-below the industry average of 19.38x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, ABO Energy GmbH KGaA’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
View our latest analysis for ABO Energy GmbH KGaA
What does the future of ABO Energy GmbH KGaA 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. ABO Energy GmbH KGaA's earnings over the next few years are expected to increase by 59%, 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? Since AB9 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.