At €0.98, Is Warimpex Finanz- und Beteiligungs AG (VIE:WXF) Worth Looking At Closely?

Warimpex Finanz- und Beteiligungs AG (VIE:WXF), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the WBAG. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Warimpex Finanz- und Beteiligungs’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Warimpex Finanz- und Beteiligungs

What Is Warimpex Finanz- und Beteiligungs Worth?

Great news for investors – Warimpex Finanz- und Beteiligungs is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Warimpex Finanz- und Beteiligungs’s ratio of 2.13x is below its peer average of 18.29x, which indicates the stock is trading at a lower price compared to the Hospitality industry. What’s more interesting is that, Warimpex Finanz- und Beteiligungs’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Warimpex Finanz- und Beteiligungs?

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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Warimpex Finanz- und Beteiligungs, at least in the near future.

What This Means For You

Are you a shareholder? Although WXF is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to WXF, 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 WXF for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, Warimpex Finanz- und Beteiligungs has 5 warning signs (and 3 which are potentially serious) we think you should know about.

If you are no longer interested in Warimpex Finanz- und Beteiligungs, 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.