Bilfinger SE (FRA:GBF), which is in the commercial services business, and is based in Germany, received a lot of attention from a substantial price movement on the DB over the last few months, increasing to €44.96 at one point, and dropping to the lows of €39.78. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Bilfinger’s current trading price of €40.34 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 Bilfinger’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Bilfinger still cheap?
According to my valuation model, Bilfinger seems to be fairly priced at around 6.6% below my intrinsic value, which means if you buy Bilfinger today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €43.19, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Bilfinger’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.
What does the future of Bilfinger look like?
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With revenues expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Bilfinger. 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? It seems like the market has already priced in GBF’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on GBF, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Bilfinger. You can find everything you need to know about Bilfinger in the latest infographic research report. If you are no longer interested in Bilfinger, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.