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NN Group N.V. (AMS:NN) saw significant share price movement during recent months on the ENXTAM, rising to highs of €39.1 and falling to the lows of €34.02. 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 NN Group's current trading price of €36.18 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 NN Group’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 NN Group
What is NN Group worth?
According to my relative valuation model, the stock seems to be currently fairly priced. 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 NN Group’s ratio of 10.35x is trading slightly below its industry peers’ ratio of 13.22x, which means if you buy NN Group today, you’d be paying a reasonable price for it. And if you believe that NN Group should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like NN Group’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from NN 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. With profit expected to grow by 24% over the next couple of years, the future seems bright for NN Group. 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? It seems like the market has already priced in NN’s positive outlook, with shares trading around its fair value. 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 NN? Will you have enough confidence to invest in the company should the price drop below its fair value?