Today we're going to take a look at the well-established Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW). The company's stock saw significant share price movement during recent months on the XTRA, rising to highs of €113 and falling to the lows of €99.41. 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 Bayerische Motoren Werke's current trading price of €107 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 Bayerische Motoren Werke’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Bayerische Motoren Werke
Is Bayerische Motoren Werke Still Cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.99% above my intrinsic value, which means if you buy Bayerische Motoren Werke today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €91.25, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Bayerische Motoren Werke’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 kind of growth will Bayerische Motoren Werke generate?
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. Though in the case of Bayerische Motoren Werke, it is expected to deliver a negative earnings growth of -6.7%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Currently, BMW appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.