ABN AMRO Bank N.V. (AMS:ABN), operating in the financial services industry based in Netherlands, led the ENXTAM gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at ABN AMRO Bank’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What is ABN AMRO Bank worth?
Great news for investors – ABN AMRO Bank is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €16.76, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that ABN AMRO Bank’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.
What does the future of ABN AMRO Bank look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a negative profit growth of -3.0% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for ABN AMRO Bank. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although ABN is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ABN, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on ABN for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on ABN AMRO Bank. You can find everything you need to know about ABN AMRO Bank in the latest infographic research report. If you are no longer interested in ABN AMRO Bank, 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 firstname.lastname@example.org. 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.
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