Yahoo Finance Should You Investigate Siltronic AG (ETR:WAF) At €75.00?
While Siltronic AG (ETR:WAF) might not have the largest market cap around , it saw significant share price movement during recent months on the XTRA, rising to highs of €92.25 and falling to the lows of €70.20. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Siltronic's current trading price of €75.00 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Siltronic’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Siltronic
What's The Opportunity In Siltronic?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 15.63x is currently trading in-line with its industry peers’ ratio, which means if you buy Siltronic today, you’d be paying a relatively sensible price for it. So, is there another chance to buy low in the future? Given that Siltronic’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.
What kind of growth will Siltronic generate?
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. Though in the case of Siltronic, it is expected to deliver a negative earnings growth of -13%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? WAF seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on WAF, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on WAF for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on WAF should the price fluctuate below the industry PE ratio.
If you want to dive deeper into Siltronic, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for Siltronic (1 makes us a bit uncomfortable!) that we believe deserve your full attention.
If you are no longer interested in Siltronic, 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.
