ABO Wind AG (ETR:AB9), might not be a large cap stock, but it saw significant share price movement during recent months on the XTRA, rising to highs of €95.40 and falling to the lows of €68.80. 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 ABO Wind's current trading price of €69.60 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 ABO Wind’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for ABO Wind
Is ABO Wind Still Cheap?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that ABO Wind’s ratio of 26.1x is trading slightly below its industry peers’ ratio of 28.74x, which means if you buy ABO Wind today, you’d be paying a decent price for it. And if you believe that ABO Wind 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 ABO Wind’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.
Can we expect growth from ABO Wind?
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. 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 Wind's earnings over the next few years are expected to increase by 26%, 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? It seems like the market has already priced in AB9’s positive outlook, 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 AB9? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?