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What Does Orion Engineered Carbons S.A.'s (NYSE:OEC) Share Price Indicate?

Simply Wall St

Orion Engineered Carbons S.A. (NYSE:OEC), which is in the chemicals business, and is based in Luxembourg, saw a significant share price rise of over 20% in the past couple of months on the NYSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Orion Engineered Carbons’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Orion Engineered Carbons

What is Orion Engineered Carbons worth?

According to my valuation model, Orion Engineered Carbons seems to be fairly priced at around 11.05% above my intrinsic value, which means if you buy Orion Engineered Carbons today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $14.58, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Orion Engineered Carbons’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 Orion Engineered Carbons?

NYSE:OEC Past and Future Earnings, October 4th 2019

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. Orion Engineered Carbons’s earnings over the next few years are expected to increase by 40%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in OEC’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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on OEC, 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 Orion Engineered Carbons. You can find everything you need to know about Orion Engineered Carbons in the latest infographic research report. If you are no longer interested in Orion Engineered Carbons, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.