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Fraport AG (ETR:FRA), might not be a large cap stock, but it saw significant share price movement during recent months on the XTRA, rising to highs of €44.49 and falling to the lows of €36.20. 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 Fraport's current trading price of €39.45 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 Fraport’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 Fraport
Is Fraport Still Cheap?
Fraport appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and 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 Fraport’s ratio of 70.64x is above its peer average of 12.28x, which suggests the stock is trading at a higher price compared to the Infrastructure industry. But, is there another opportunity to buy low in the future? Given that Fraport’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Fraport?
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. Fraport'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 well and truly priced in FRA’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe FRA should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.