What Does Deutsche Pfandbriefbank AG’s (ETR:PBB) Share Price Indicate?
Deutsche Pfandbriefbank AG (XTRA:PBB), operating in the financial services industry based in Germany, saw significant share price volatility over the past couple of months on the XTRA, rising to the highs of €14.41 and falling to the lows of €12.3. 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 Deutsche Pfandbriefbank’s current trading price of €12.97 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 Deutsche Pfandbriefbank’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 Deutsche Pfandbriefbank
What’s the opportunity in Deutsche Pfandbriefbank?
According to my valuation model, the stock is currently overvalued by about 37%, trading at €12.97 compared to my intrinsic value of €9.46. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Deutsche Pfandbriefbank’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 Deutsche Pfandbriefbank?
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. Though in the case of Deutsche Pfandbriefbank, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? If you believe PBB should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on PBB for a while, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Deutsche Pfandbriefbank. You can find everything you need to know about Deutsche Pfandbriefbank in the latest infographic research report. If you are no longer interested in Deutsche Pfandbriefbank, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.
