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Edel SE & Co. KGaA (ETR:EDL), might not be a large cap stock, but it saw significant share price movement during recent months on the XTRA, rising to highs of €5.25 and falling to the lows of €4.20. 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 Edel SE KGaA's current trading price of €4.20 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Edel 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 Edel SE KGaA
What's The Opportunity In Edel SE KGaA?
Great news for investors – Edel SE KGaA is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. 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 Edel SE KGaA’s ratio of 7.35x is below its peer average of 16.24x, which indicates the stock is trading at a lower price compared to the Entertainment industry. What’s more interesting is that, Edel SE KGaA’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 Edel SE KGaA?
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 revenues expected to grow by a double-digit 14% over the next couple of years, the outlook is positive for Edel SE KGaA. If the level of expenses is able to be maintained, 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? Since EDL is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.