Polytec Holding AG (VIE:PYT), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the WBAG over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Polytec Holding’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Polytec Holding
Is Polytec Holding still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.48% above my intrinsic value, which means if you buy Polytec Holding today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth €8.21, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Polytec Holding’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 does the future of Polytec Holding look like?
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 revenues expected to grow by a double-digit 21% over the next couple of years, the outlook is positive for Polytec Holding. If the level of expenses is able to be maintained, 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? PYT’s optimistic future growth appears to have been factored into the current share price, 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 PYT, 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.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Be aware that Polytec Holding is showing 2 warning signs in our investment analysis and 1 of those is a bit concerning...
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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.
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About WBAG:PYT
Polytec Holding
Develops and manufactures plastic solutions for the passenger cars and light commercial vehicles, commercial vehicles, and smart plastic and industrial applications.
Reasonable growth potential with adequate balance sheet.
