While Landis+Gyr Group AG (VTX:LAND) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the SWX over the last few months. 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. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Landis+Gyr Group’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Landis+Gyr Group
What's The Opportunity In Landis+Gyr Group?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 Landis+Gyr Group’s ratio of 40.42x is trading slightly above its industry peers’ ratio of 34.15x, which means if you buy Landis+Gyr Group today, you’d be paying a relatively sensible price for it. And if you believe Landis+Gyr Group should be trading in this range, then there isn’t really any room for the share price 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 Landis+Gyr Group’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.
Can we expect growth from Landis+Gyr Group?
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. Landis+Gyr Group's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 LAND’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 LAND? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?