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Deutsche Post AG (ETR:DHL) received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €38.04 at one point, and dropping to the lows of €33.05. 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 Deutsche Post's current trading price of €35.48 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 Deutsche Post’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Deutsche Post
What's The Opportunity In Deutsche Post?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 12.71x is currently trading slightly below its industry peers’ ratio of 13.84x, which means if you buy Deutsche Post today, you’d be paying a decent price for it. And if you believe that Deutsche Post 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. Although, there may be an opportunity to buy in the future. This is because Deutsche Post’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 Deutsche Post?
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. With profit expected to grow by 28% over the next couple of years, the future seems bright for Deutsche Post. 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? DHL’s optimistic future growth appears to have been factored into the current share price, 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 DHL? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?