Is It Too Late To Consider Buying KION GROUP AG (ETR:KGX)?
KION GROUP AG (ETR:KGX), is not the largest company out there, but it received a lot of attention from a substantial price increase on the XTRA over the last few months. As a mid-cap stock with high coverage 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? Today I will analyse the most recent data on KION GROUP’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for KION GROUP
What's The Opportunity In KION GROUP?
According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 19.7x is currently well-above the industry average of 13.52x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since KION GROUP’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 does the future of KION GROUP 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. 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. KION GROUP's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in KGX’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe KGX should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on KGX for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for KGX, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about KION GROUP as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for KION GROUP and you'll want to know about this.
If you are no longer interested in KION GROUP, you can use our free platform to see our 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
