When Should You Buy Zehnder Group AG (VTX:ZEHN)?

While Zehnder Group AG (VTX:ZEHN) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SWX, rising to highs of CHF106 and falling to the lows of CHF87.20. 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 Zehnder Group's current trading price of CHF94.00 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 Zehnder Group’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 Zehnder Group

What's the opportunity in Zehnder Group?

According to my valuation model, the stock is currently overvalued by about 27%, trading at CHF94.00 compared to my intrinsic value of CHF73.77. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that Zehnder Group’s share price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Zehnder Group 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. 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 -3.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Zehnder Group. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? If you believe ZEHN is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, 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 tabs on ZEHN for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative 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?

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in Zehnder Group, 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.