Is It Too Late To Consider Buying Aareal Bank AG (ETR:ARL)?
Aareal Bank AG (ETR:ARL), operating in the financial services industry 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. But what if there is still an opportunity to buy? Let’s take a look at Aareal Bank’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Aareal Bank
What's the opportunity in Aareal Bank?
According to my valuation model, Aareal Bank seems to be fairly priced at around 7.56% above my intrinsic value, which means if you buy Aareal Bank today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is €14.09, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Aareal 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Aareal Bank?
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 profit expected to grow by 25% over the next couple of years, the future seems bright for Aareal Bank. 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 ARL’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 an eye on ARL, now may not be the most optimal 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 Aareal Bank. You can find everything you need to know about Aareal Bank in the latest infographic research report. If you are no longer interested in Aareal Bank, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.
