U.S. Markets closed

Is There Now An Opportunity In Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW)?

Simply Wall St

Let's talk about the popular Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW). The company's shares led the XTRA gainers with a relatively large price hike in the past couple of weeks. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Bayerische Motoren Werke’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Bayerische Motoren Werke

What's the opportunity in Bayerische Motoren Werke?

According to my valuation model, Bayerische Motoren Werke seems to be fairly priced at around 10.98% above my intrinsic value, which means if you buy Bayerische Motoren Werke today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €67.46, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Bayerische Motoren Werke’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.

What kind of growth will Bayerische Motoren Werke generate?

XTRA:BMW Past and Future Earnings, November 13th 2019

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. Bayerische Motoren Werke’s earnings over the next few years are expected to increase by 37%, 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 BMW’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 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 BMW, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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 Bayerische Motoren Werke. You can find everything you need to know about Bayerische Motoren Werke in the latest infographic research report. If you are no longer interested in Bayerische Motoren Werke, 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.