U.S. Markets closed

Is HolidayCheck Group AG (ETR:HOC) Potentially Undervalued?

Simply Wall St

HolidayCheck Group AG (ETR:HOC), which is in the online retail business, and is based in Germany, received a lot of attention from a substantial price increase on the XTRA over the last few months. 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? Let’s examine HolidayCheck Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for HolidayCheck Group

What's the opportunity in HolidayCheck Group?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.43% above my intrinsic value, which means if you buy HolidayCheck Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is €2.58, 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 HolidayCheck Group’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 HolidayCheck Group?

XTRA:HOC Past and Future Earnings, January 1st 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 57% over the next couple of years, the future seems bright for HolidayCheck Group. 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 HOC’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 an eye on HOC, now may not be the most optimal 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 diving deeper into 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 HolidayCheck Group. You can find everything you need to know about HolidayCheck Group in the latest infographic research report. If you are no longer interested in HolidayCheck Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.