Advertisement
U.S. markets open in 1 hour 55 minutes
  • S&P Futures

    5,307.00
    -1.25 (-0.02%)
     
  • Dow Futures

    40,143.00
    -1.00 (-0.00%)
     
  • Nasdaq Futures

    18,498.75
    -5.00 (-0.03%)
     
  • Russell 2000 Futures

    2,139.80
    +1.40 (+0.07%)
     
  • Crude Oil

    82.48
    +1.13 (+1.39%)
     
  • Gold

    2,232.10
    +19.40 (+0.88%)
     
  • Silver

    24.75
    -0.01 (-0.03%)
     
  • EUR/USD

    1.0796
    -0.0034 (-0.31%)
     
  • 10-Yr Bond

    4.1960
    0.0000 (0.00%)
     
  • Vix

    13.00
    +0.22 (+1.72%)
     
  • GBP/USD

    1.2622
    -0.0016 (-0.12%)
     
  • USD/JPY

    151.3820
    +0.1360 (+0.09%)
     
  • Bitcoin USD

    70,723.54
    +650.37 (+0.93%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,955.32
    +23.34 (+0.29%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Does The Barco NV (EBR:BAR) Share Price Tend To Follow The Market?

Anyone researching Barco NV (EBR:BAR) might want to consider the historical volatility of the share price. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.

Some stocks are more sensitive to general market forces than others. Beta is a widely used metric to measure a stock's exposure to market risk (volatility). Before we go on, it's worth noting that Warren Buffett pointed out in his 2014 letter to shareholders that 'volatility is far from synonymous with risk.' Having said that, beta can still be rather useful. The first thing to understand about beta is that the beta of the overall market is one. Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market.

Check out our latest analysis for Barco

What we can learn from BAR's beta value

Looking at the last five years, Barco has a beta of 0.84. The fact that this is well below 1 indicates that its share price movements haven't historically been very sensitive to overall market volatility. This means that -- if history is a guide -- buying the stock would reduce the impact of overall market volatility in many portfolios (depending on the beta of the portfolio, of course). Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Barco fares in that regard, below.

ENXTBR:BAR Income Statement, October 3rd 2019
ENXTBR:BAR Income Statement, October 3rd 2019

Does BAR's size influence the expected beta?

Barco is a reasonably big company, with a market capitalisation of €2.2b. Most companies this size are actively traded with decent volumes of shares changing hands each day. It is a little unusual to see big companies like this trade on low beta values. Oftentimes there is some other clear influence on the share price, overshadowing market volatility.

What this means for you:

The Barco doesn't usually show much sensitivity to the broader market. This could be for a variety of reasons. Typically, smaller companies have a low beta if their share price tends to move a lot due to company specific developments. Alternatively, an strong dividend payer might move less than the market because investors are valuing it for its income stream. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Barco’s financial health and performance track record. I urge you to continue your research by taking a look at the following:

  1. Financial Health: Are BAR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  2. Past Track Record: Has BAR been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of BAR's historicals for more clarity.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

Advertisement