At AU$13.82, Is It Time To Put Eagers Automotive Limited (ASX:APE) On Your Watch List?

While Eagers Automotive Limited (ASX:APE) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the ASX, rising to highs of AU$16.01 and falling to the lows of AU$12.87. 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 Eagers Automotive's current trading price of AU$13.82 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 Eagers Automotive’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Eagers Automotive

What Is Eagers Automotive Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 11.38% above my intrinsic value, which means if you buy Eagers Automotive today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth A$12.41, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Eagers Automotive’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 kind of growth will Eagers Automotive generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a relatively muted profit growth of 1.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Eagers Automotive, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in APE’s future outlook, 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on APE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Eagers Automotive as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 2 warning signs for Eagers Automotive and you'll want to know about these.

If you are no longer interested in Eagers Automotive, 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.