When Should You Buy Erste Group Bank AG (VIE:EBS)?

Today we’re going to take a look at the well-established Erste Group Bank AG (VIE:EBS). The company’s stock saw a double-digit share price rise of over 10% in the past couple of months on the WBAG. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Erste Group Bank’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Erste Group Bank

What is Erste Group Bank worth?

Great news for investors – Erste Group Bank is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €42.36, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Erste Group Bank’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from Erste Group Bank?

WBAG:EBS Past and Future Earnings, December 4th 2019
WBAG:EBS Past and Future Earnings, December 4th 2019

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. However, with a negative profit growth of -4.8% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Erste Group Bank. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although EBS is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to EBS, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on EBS for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Erste Group Bank. You can find everything you need to know about Erste Group Bank in the latest infographic research report. If you are no longer interested in Erste Group Bank, 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.