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Is Now The Time To Look At Buying Vienna Insurance Group AG (VIE:VIG)?

Simply Wall St

Vienna Insurance Group AG (VIE:VIG), which is in the insurance business, and is based in Austria, saw a double-digit share price rise of over 10% in the past couple of months on the WBAG. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Vienna Insurance Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Vienna Insurance Group

What is Vienna Insurance Group worth?

According to my relative valuation model, the stock seems to be currently fairly priced. 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 Vienna Insurance Group’s ratio of 11.6x is trading slightly below its industry peers’ ratio of 12.44x, which means if you buy Vienna Insurance Group today, you’d be paying a reasonable price for it. And if you believe that Vienna Insurance Group should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Vienna Insurance Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Vienna Insurance Group generate?

WBAG:VIG Past and Future Earnings, December 5th 2019

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. With profit expected to grow by 23% over the next couple of years, the future seems bright for Vienna Insurance Group. 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 VIG’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 VIG? Will you have enough conviction to buy should the price fluctuate below the true value?

Are you a potential investor? If you’ve been keeping an eye on VIG, 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 VIG, 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 Vienna Insurance Group. You can find everything you need to know about Vienna Insurance Group in the latest infographic research report. If you are no longer interested in Vienna Insurance 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.