In This Article:
Dometic Group AB (publ) (STO:DOM), which is in the auto components business, and is based in Sweden, saw a double-digit share price rise of over 10% in the past couple of months on the OM. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Dometic Group’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Dometic Group
What's the opportunity in Dometic Group?
Dometic Group appears to be overvalued by 22% at the moment, based on my discounted cash flow valuation. The stock is currently priced at kr93.86 on the market compared to my intrinsic value of SEK76.95. This means that the opportunity to buy Dometic Group at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Dometic Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
Can we expect growth from Dometic Group?
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. Dometic Group’s earnings over the next few years are expected to increase by 23%, 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? DOM’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe DOM should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on DOM for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for DOM, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.