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While Ströer SE & Co. KGaA (ETR:SAX) might not have the largest market cap around , it saw significant share price movement during recent months on the XTRA, rising to highs of €63.20 and falling to the lows of €54.25. 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 Ströer SE KGaA's current trading price of €55.30 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ströer SE KGaA’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 Ströer SE KGaA
What's The Opportunity In Ströer SE KGaA?
According to our 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, 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 Ströer SE KGaA’s ratio of 28.63x is trading slightly below its industry peers’ ratio of 28.63x, which means if you buy Ströer SE KGaA today, you’d be paying a reasonable price for it. And if you believe Ströer SE KGaA should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Ströer SE KGaA’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Ströer SE KGaA 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 more than double over the next couple of years, the future seems bright for Ströer SE KGaA. 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 SAX’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 SAX? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?