Stock Analysis

At €30.13, Is Umicore SA (EBR:UMI) Worth Looking At Closely?

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ENXTBR:UMI
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While Umicore SA (EBR:UMI) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the ENXTBR, rising to highs of €37.19 and falling to the lows of €29.15. 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 Umicore's current trading price of €30.13 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 Umicore’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Umicore

What's The Opportunity In Umicore?

Umicore is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison 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 13.7x is currently well-above the industry average of 5.11x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Umicore’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Umicore?

earnings-and-revenue-growth
ENXTBR:UMI Earnings and Revenue Growth October 1st 2022

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. However, with a negative profit growth of -7.0% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Umicore. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? If you believe UMI should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on UMI for a while, now may not be the best time to enter into the stock. The price has climbed past its industry peers, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

If you want to dive deeper into Umicore, you'd also look into what risks it is currently facing. For example, Umicore has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you are no longer interested in Umicore, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Umicore is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About ENXTBR:UMI

Umicore

Umicore SA operates as a materials technology and recycling company worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth0
Past Performance4
Financial Health5
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet with proven track record and pays a dividend.