Should You Think About Buying Warimpex Finanz- und Beteiligungs AG (VIE:WXF) Now?

Warimpex Finanz- und Beteiligungs AG (VIE:WXF), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the WBAG over the last few months, increasing to €0.88 at one point, and dropping to the lows of €0.70. 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 Warimpex Finanz- und Beteiligungs' current trading price of €0.70 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Warimpex Finanz- und Beteiligungs’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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. 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 1.23x is currently well-below the industry average of 17.16x, meaning that it is trading at a cheaper price relative to its peers. However, given that Warimpex Finanz- und Beteiligungs’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Warimpex Finanz- und Beteiligungs 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 Warimpex Finanz- und Beteiligungs, it is expected to deliver a highly negative earnings growth in the next few years, 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? 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.

So while earnings quality is important, it's equally important to consider the risks facing Warimpex Finanz- und Beteiligungs at this point in time. For instance, we've identified 5 warning signs for Warimpex Finanz- und Beteiligungs (3 make us uncomfortable) you should be familiar with.

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.