Is Now The Time To Look At Buying Ströer SE & Co. KGaA (ETR:SAX)?
Ströer SE & Co. KGaA (ETR:SAX), which is in the media business, and is based in Germany, saw a decent share price growth in the teens level on the XTRA over the last few months. 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. But what if there is still an opportunity to buy? Let’s examine Ströer SE KGaA’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Ströer SE KGaA
What's the opportunity in Ströer SE KGaA?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Ströer SE KGaA’s ratio of 24.73x is trading slightly above its industry peers’ ratio of 22.51x, which means if you buy Ströer SE KGaA today, you’d be paying a relatively sensible price for it. And if you believe that Ströer SE KGaA should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, Ströer SE KGaA’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Ströer SE KGaA?
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. With profit expected to grow by 91% over the next couple of years, the future seems bright for Ströer SE KGaA. 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 SAX’s positive outlook, with shares trading around industry price multiples. 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 SAX? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on SAX, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for SAX, 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 Ströer SE KGaA. You can find everything you need to know about Ströer SE KGaA in the latest infographic research report. If you are no longer interested in Ströer SE KGaA, 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.
