Is There Now An Opportunity In Aluflexpack AG (VTX:AFP)?

Aluflexpack AG (VTX:AFP), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SWX over the last few months, increasing to CHF36.60 at one point, and dropping to the lows of CHF21.20. 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 Aluflexpack's current trading price of CHF21.20 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 Aluflexpack’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 Aluflexpack

What is Aluflexpack worth?

The share price seems sensible at the moment 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 Aluflexpack’s ratio of 18.5x is trading slightly above its industry peers’ ratio of 18.16x, which means if you buy Aluflexpack today, you’d be paying a relatively sensible price for it. And if you believe that Aluflexpack should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. In addition to this, it seems like Aluflexpack’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Aluflexpack look like?

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. Though in the case of Aluflexpack, it is expected to deliver a negative earnings growth of -7.7%, 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? AFP seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on AFP, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on AFP for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on AFP should the price fluctuate below the industry PE ratio.

If you'd like to know more about Aluflexpack as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Aluflexpack.

If you are no longer interested in Aluflexpack, 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.